Every Stock Market Term Explained in 20 Minutes

Summary

The video script from 'True Investing Academy' introduces viewers to 151 key terms related to the stock market. It covers the basics of investing, IPOs, public offerings, stock exchanges, market capitalization, indices like SENSEX and NIFTY, trading accounts, brokers, and various types of trading including leveraged and intraday. It also explains investment strategies, market conditions, mutual funds, equity, bonds, and financial analysis, providing a comprehensive guide for beginners in the world of investing.

Takeaways

• 😀 The script is a comprehensive guide to stock market terms and concepts, aimed at educating viewers on the basics of investing.
• 📈 'Share Market' is described as a platform that facilitates public investment in companies, with shares being portions of a company's ownership.
• 🏢 IPOs (Initial Public Offerings) are explained as the first-time sale of shares by a company to the public, with Main Line IPOs and SME IPOs being different types based on the amount raised.
• 📊 Stock Exchanges like BSE and NSE are platforms for buying and selling shares, with indices like SENSEX and NIFTY representing the average performance of top companies listed on these exchanges.
• 💼 The roles of 'Shareholders', 'Brokers', and 'Fund Managers' are outlined, detailing how they interact within the stock market ecosystem.
• 💡 'Investing' and 'Trading' are differentiated, with investing being a long-term approach and trading focusing on short-term gains.
• 📚 Different types of mutual funds, such as Equity, Index, and Direct Mutual Funds, are explained, along with their benefits and how they are priced (NAV - Net Asset Value).
• 🌐 The concept of 'Leverage' in trading is introduced, where investors trade shares with borrowed money to amplify potential gains.
• 📉 Market conditions like 'Bull Market' and 'Bear Market' are defined, with the former indicating rising share prices and optimism, and the latter signifying falling prices and pessimism.
• 🏦 The script touches on financial instruments like 'Bonds', explaining how they work as a loan to a company or organization in exchange for interest payments.
• 📋 Financial terms such as 'Balance Sheet', 'Income Statement', and 'Cash Flow Statement' are briefly introduced, providing insight into a company's financial health and performance.

Q & A

What is the primary function of the stock market?

The primary function of the stock market is to provide a platform for the public to invest in companies by facilitating the buying and selling of shares or stocks.

What is an IPO and why is it significant for a company?

An IPO, or Initial Public Offering, is significant for a company as it is the first time the company offers its shares to the public to raise capital. It marks the company's entry into the stock market and public trading.

What are the two types of IPOs mentioned in the script and how do they differ in terms of the amount raised?

The script mentions Mainline IPOs, where a company typically raises more than ₹100 crores, and SME IPOs, where the company raises less than ₹100 crores. The difference lies in the amount of capital the company aims to raise through the IPO.

What is a Follow-on Public Offer (FPO) and how does it relate to an IPO?

A Follow-on Public Offer (FPO) is a subsequent offering of shares to the public by a company after its IPO, to raise additional funds. It is related to an IPO as it involves the sale of shares to the public but happens after the company has already gone public.

What is the role of a stock exchange in the context of the stock market?

A stock exchange serves as a platform where the buying and selling of shares takes place. It provides the infrastructure for trading and price discovery in the stock market.

What are the two main stock exchanges in India mentioned in the script?

The two main stock exchanges in India mentioned in the script are BSE (Bombay Stock Exchange) and NSE (National Stock Exchange).

What is meant by 'Market Cap' and how is it used in the stock market?

Market Cap, short for Market Capitalization, indicates the total market value of a company's outstanding shares. It is used to determine the size of a company and is a key metric for investors to assess the company's value and scale.

What is a Stock Index and how does it reflect the performance of the stock market?

A Stock Index is a statistical measure that shows the average performance of a group of companies listed on a stock exchange. It reflects the overall health and performance of the stock market by tracking the value of these companies over time.

What is the difference between Sensex and Nifty as stock indices?

Sensex is the stock index of BSE, representing the average performance of the 30 largest and most heavily traded companies listed on BSE. Nifty, on the other hand, is the stock index of NSE, representing the average performance of the 50 most widely traded companies listed on NSE.

What is a Demat account and why is it important for investors?

A Demat account is a digital account where an investor's shares are held in electronic form. It is important for investors as it facilitates the easy and secure buying, selling, and transfer of shares without the need for physical certificates.

What is the role of a broker in the stock market?

A broker is an exchange-registered company that opens an investor's trading and Demat accounts. They execute buy and sell orders on behalf of investors and charge a fee for their services, known as brokerage.

What is meant by 'Investing' and 'Trading' in the context of the stock market?

Investing refers to the act of buying shares with the intention of holding them for a long term, expecting the value to increase over time. Trading, in contrast, involves buying and selling shares in a short period to make profits from small price fluctuations.

What is Leverage or Margin Trading and how does it work?

Leverage or Margin Trading is a method of trading where investors trade shares using borrowed money from the broker. It allows investors to trade with more capital than they actually have,放大 the potential gains or losses.

What is a Mutual Fund and how does it operate in the stock market?

A Mutual Fund is a common fund where money from many investors is pooled together. A fund manager invests these pooled funds in the stock market. The value of each unit in the mutual fund is called the Net Asset Value (NAV), which changes at the end of the market day.

What is the difference between Direct Mutual Funds and Regular Mutual Funds in terms of expense ratio?

Direct Mutual Funds are purchased directly from the mutual fund company without distributor commissions, resulting in a lower expense ratio. Regular Mutual Funds are bought through mutual fund distributors and have a higher expense ratio due to the inclusion of distributor commissions.

What is the role of SEBI in the Indian stock market?

SEBI, or the Securities and Exchange Board of India, is the regulatory authority that oversees and regulates the Indian stock market to protect the interests of investors and maintain the integrity of the market.

What is the purpose of SCORES and how can it be accessed?

SCORES, or SEBI Complaints Redress System, is a complaint portal for any kind of fraud in the stock market. It can be accessed through its website at scores.gov.in, allowing investors to report any fraudulent activities.