Market FAQs.

The stock market is a public marketplace where shares of publicly listed companies are bought and sold. In India, key transactions take place on exchanges like NSE and BSE.

Nifty 50 is the benchmark index of the National Stock Exchange (NSE), tracking the top 50 companies. Sensex is the index of the Bombay Stock Exchange (BSE), tracking the top 30 companies.

NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are the two primary stock exchanges in India where shares are listed and traded.

A Demat (Dematerialized) account holds your shares and securities in electronic format, removing the need for physical share certificates.

A Trading account is used to place buy or sell orders in the stock market. It acts as the bridge between your bank account and your Demat account.

Market capitalization is the total value of a company's outstanding shares. Calculated as: Share Price x Total Shares. Companies are classified as Large-cap, Mid-cap, or Small-cap based on this.

A dividend is a share of profits distributed by a company to its shareholders, usually paid per share held.

A stock split divides a company's existing shares into multiple shares to lower the individual share price and increase liquidity, without changing the total market cap.

Bonus shares are additional free shares given to existing shareholders based on the number of shares they already hold, funded from the company's accumulated reserves.

SEBI (Securities and Exchange Board of India) is the government-appointed regulator of Indian financial and securities markets, protecting investors' interests.

A mutual fund pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or gold, managed by a professional fund manager.

An SIP (Systematic Investment Plan) is an investment method where you commit to investing a fixed amount regularly (monthly or weekly) into a mutual fund scheme.

Direct plans are bought directly from the fund house for lower expense ratios. Regular plans are bought through brokers/agents and include commissions, lowering your compounding returns.

The expense ratio is the annual fee charged by a mutual fund company to manage your money, deducted as a percentage of your total asset value.

Net Asset Value (NAV) represents the price of a single unit of a mutual fund scheme, calculated at the end of each trading business day.

Exit load is a fee charged by some mutual funds if you withdraw your investment before a specified period (typically 1 year) to discourage short-term redemptions.

An index fund is a passive mutual fund that copy-tracks a market index (like Nifty 50) for near-zero expense ratio fees, matching index returns.

ELSS (Equity Linked Savings Scheme) is a tax-saving mutual fund with a statutory 3-year lock-in, eligible for tax deductions under Sec 80C.

A debt fund is a mutual fund that invests in fixed-income securities like government bonds, corporate debentures, and treasury bills for lower risk returns.

Asset allocation is the strategy of dividing your portfolio among different assets (Equity, Debt, Gold) to control downside risk and balance growth.

Intraday trading involves buying and selling shares on the same trading day. If positions are not closed by the end of the day, they are auto-squared off.

Delivery trading involves purchasing shares and holding them overnight or longer. The shares are credited to your Demat account, giving you ownership.

F&O are derivative contracts where you trade contracts representing underlying stocks or indices, allowing leverage and short-selling capabilities.

A stop loss is a trigger price order placed with your broker to automatically sell a share if the price drops to a specific limit, capping your losses.

A market order executes instantly at the best available current price. A limit order only executes if the price reaches your specific target buy/sell price.

Short selling is selling shares you do not own (borrowed from the exchange) expecting the price to fall, so you can buy them back cheaper to pocket the difference.

In India, trades settle on a T+1 basis, meaning shares purchased or funds from sales are credited to your Demat/bank account 1 business day after the trade.

Dematerialization is the process of converting physical paper share certificates into electronic book entry ledger balances in Demat accounts.

DP (Depository Participant) charges are flat fees charged by NSDL/CDSL and brokers whenever you sell shares from your Demat account, typically around ₹13-16 per company per day.

Circuits are price caps (Upper and Lower) set by exchanges (usually 5%, 10%, or 20%) to halt trading in highly volatile stocks to prevent market manipulation.

Short-term Capital Gains (STCG) on equity shares apply when sold within 12 months. Under the latest budget, STCG is taxed at a flat rate of 20%.

Long-term Capital Gains (LTCG) on equities apply for holdings above 12 months. Taxed at 12.5% on gains exceeding the ₹1.25 Lakh annual exemption limit.

Yes, dividend income is added to your standard income slab and taxed according to your tax bracket. TDS of 10% is deducted if payouts exceed ₹5,000.

STT is a direct tax levied on the purchase and sale of securities listed on Indian exchanges, automatically deducted by brokers.

Debt fund gains are treated as short-term capital gains and taxed at your individual income tax slab rates, regardless of the holding period.

Sovereign Gold Bonds (SGB) capital gains are 100% tax-free if held until maturity (8 years). Annual 2.5% interest payouts are taxed at your income slabs.

Stamp duty is a transaction tax levied on the buy side of trades (0.015% for delivery, 0.003% for intraday), collected by brokers.

No, PPF returns are completely tax-exempt. Deposits qualify for Sec 80C deductions, and interest earned is tax-free.

Yes, you can claim up to ₹1.5L under Sec 80C and an additional ₹50,000 deduction under Sec 80CCD(1B) for NPS deposits.

Tax loss harvesting is selling loss-making shares before March 31st to offset taxable capital gains realized during the financial year, reducing tax bills.

Fundamental analysis evaluates a company's financial health, profit metrics, debt ratios, management, and growth potential to calculate its fair intrinsic value.

Price-to-Earnings (P/E) ratio shows how much investors are willing to pay for every rupee of earnings. Calculated as: Share Price / Earnings Per Share.

Price-to-Book (P/B) ratio compares stock price to the book value per share, commonly used to evaluate banks and financial institutions.

Debt-to-Equity compares total debt liabilities to shareholder equity. A high ratio (typically > 1) indicates high leverage risk.

EPS is the portion of a company's profit allocated to each outstanding share, representing profitability per share.

Intrinsic value is the calculated 'fair value' price of a stock based on cash flows, earnings power, and assets, independent of market fluctuations.

Margin of safety is the discount buffer (typically 20-30%) applied below the intrinsic value to protect investments from valuation errors.

ROE (Return on Equity) measures profits relative to shareholder funds. ROCE (Return on Capital Employed) measures profits relative to total capital (debt + equity) deployed.

Free cash flow is the cash left over after a company pays for operational expenses and capital expenditures (CAPEX). It represents cash usable for dividends or expansion.

Promoter holding represents the equity stake owned by the founders/promoters of the company. A high promoter stake signals management commitment.