The Complete Critical Terms Glossary

A person who prepares or publishes research reports, makes 'buy/sell/hold' recommendations, gives price targets, or opines on public offers — and is registered with SEBI under the RA Regulations, 2014.

• e.g.An analyst at a brokerage publishing a 'BUY, target ₹1,500' note on Infosys must be a SEBI-registered RA.
• e.g.A YouTuber giving specific stock buy/sell calls for a fee is acting as an RA and needs registration.

Research produced by brokerages/investment banks and distributed to clients to generate trading commissions or banking business. It is widely circulated.

• e.g.A broking house circulating a note recommending clients buy a newly listed IPO stock.
• e.g.An investment bank's analyst issuing sector reports to institutional clients to drive trades.

Research done in-house by institutions (mutual funds, PMS, insurers) for their own investment decisions; usually NOT circulated publicly.

• e.g.A mutual fund's internal analyst building a model to decide whether the fund should buy HDFC Bank.
• e.g.An insurance company's research team evaluating bonds for its own portfolio.

An RA who is not employed by a broker/bank and offers research independently, charging clients a fee. Must avoid conflicts and disclose them.

• e.g.A SEBI-registered individual running a subscription research service for retail investors.
• e.g.A boutique firm selling unbiased valuation reports without any broking arm.

A situation where an analyst's personal/financial interest could compromise objectivity of the recommendation. Must be disclosed.

• e.g.An analyst owning shares of a company before issuing a 'BUY' on it.
• e.g.An analyst rating a company favourably because the analyst's firm earns banking fees from it.

Price-sensitive information not yet public, which a reasonable investor would consider important. Trading/recommending on it is illegal (insider trading).

• e.g.Knowing in advance that a company will announce a 40% profit jump tomorrow.
• e.g.Learning of an unannounced merger from a company insider.

An information barrier inside a firm separating research/investment functions from banking/dealing functions to prevent misuse of MNPI.

• e.g.A brokerage preventing its research desk from accessing its investment-banking deal information.
• e.g.Email and physical access controls separating the advisory team from the trading team.

An ownership instrument representing a residual claim on a company's profits and assets; carries voting rights and dividend (not fixed).

• e.g.Buying 100 shares of Reliance makes you a part-owner entitled to dividends and voting.
• e.g.An equity shareholder gets paid only after creditors and preference holders in liquidation.

A debt instrument where the issuer borrows money and promises fixed interest (coupon) plus repayment of principal at maturity.

• e.g.A company issuing a 5-year 8% NCD to raise ₹500 crore.
• e.g.Government of India issuing a 10-year G-Sec paying half-yearly coupons.

A long-dated instrument giving the holder the right (not obligation) to buy a company's shares at a set price within a period; issued by the company.

• e.g.A company attaching warrants to a bond letting holders buy shares at ₹200 within 3 years.
• e.g.Promoters subscribing to convertible warrants to later convert into equity.

A statistical measure tracking the performance of a basket of securities, used as a market benchmark.

• e.g.The NIFTY 50 tracks 50 large Indian companies; SENSEX tracks 30.
• e.g.A fund 'beating the index' means it returned more than the NIFTY 50.

A unit representing proportional ownership in a pooled investment vehicle managed by a fund manager; valued at NAV.

• e.g.Investing ₹10,000 in an equity fund at NAV ₹100 gives you 100 units.
• e.g.A debt fund unit whose NAV rises as the underlying bonds appreciate.

A fund tracking an index/asset that trades on an exchange like a stock throughout the day.

• e.g.A NIFTYBEES ETF that you can buy/sell on NSE at live prices.
• e.g.A Gold ETF holding physical gold, tradeable on the exchange.

Where securities are issued for the first time, channelling fresh capital from investors to issuers (IPO, FPO, rights, private placement).

• e.g.A company's IPO where it sells new shares to the public to raise money.
• e.g.A rights issue offering new shares to existing shareholders.

Where already-issued securities are traded among investors; provides liquidity and price discovery. No fresh capital goes to the issuer.

• e.g.Buying TCS shares from another investor on NSE.
• e.g.Daily trading of bonds among investors after the original issue.

A customised OTC agreement to buy/sell an asset at a fixed price on a future date; carries counterparty risk; not exchange-traded.

• e.g.An exporter agreeing with a bank to sell USD 1mn at ₹84 in 3 months.
• e.g.A jeweller locking a gold purchase price for delivery next quarter.

A standardised, exchange-traded forward with daily mark-to-market and clearing-house guarantee, eliminating counterparty risk.

• e.g.Buying one NIFTY futures contract expiring last Thursday of the month.
• e.g.A trader shorting crude oil futures on MCX.

A contract giving the right (not obligation) to buy (call) or sell (put) an asset at a strike price; buyer pays a premium.

• e.g.Buying a NIFTY 24000 call option for ₹150 premium.
• e.g.Buying a put to protect a stock holding against a fall.

An OTC contract to exchange cash flows (e.g., fixed for floating interest) over time.

• e.g.An interest-rate swap converting a floating-rate loan into a fixed-rate one.
• e.g.A currency swap exchanging INR cash flows for USD cash flows.

Taking an offsetting position to reduce risk of adverse price moves in an existing exposure.

• e.g.A farmer selling wheat futures to lock a price before harvest.
• e.g.An investor buying index puts to protect a portfolio.

Taking a position purely to profit from expected price movements, accepting high risk; no underlying exposure.

• e.g.Buying out-of-the-money options hoping for a big move.
• e.g.Going long futures with no underlying asset, betting on a rally.

Simultaneously buying and selling the same/related asset in different markets to profit from price differences with minimal risk.

• e.g.Buying a stock cheaper on NSE and selling it higher on BSE at the same moment.
• e.g.Cash-futures arbitrage exploiting the spread between spot and futures.

A firm that advises institutional investors how to vote on corporate resolutions (e.g., AGM agenda items).

• e.g.IiAS recommending investors vote against an over-generous CEO pay resolution.
• e.g.A proxy firm flagging related-party transactions before an AGM vote.

The nominal value of a share/bond stated on the certificate; basis for dividend %, splits and bond coupons.

• e.g.A share with FV ₹10 declaring '200% dividend' pays ₹20 per share.
• e.g.A bond with FV ₹1,000 and 8% coupon pays ₹80 interest annually.

Net worth attributable to shareholders per the balance sheet = Assets − Liabilities (i.e., shareholders' equity), often per share.

• e.g.Equity of ₹500 cr over 50 cr shares gives Book Value ₹10 per share.
• e.g.A bank trading below book value (P/BV < 1) may signal market pessimism.

The price at which a security currently trades in the market; set by supply and demand.

• e.g.A stock with book value ₹10 trading at ₹250 — market value reflects growth expectations.
• e.g.Market value of a bond rising above face value when rates fall.

The cost to recreate/replace a company's assets at current prices; used in asset-based valuation.

• e.g.Valuing a cement plant at what it would cost to build an identical one today.
• e.g.Tobin's Q compares market value to replacement value of assets.

The 'true' fundamental worth of a security based on expected cash flows/fundamentals, independent of market price.

• e.g.A DCF estimating a share's intrinsic value at ₹300 vs market price ₹250 (undervalued).
• e.g.A value investor buying when price falls well below intrinsic value (margin of safety).

Total market value of a company's equity = price × shares outstanding. Classifies large/mid/small caps.

• e.g.₹500 share price × 100 cr shares = ₹50,000 cr market cap.
• e.g.A company moving from mid-cap to large-cap as its market cap grows.

The total value of a business's gainfully employed capital = market cap + debt + minority interest + preference − cash & equivalents.

• e.g.A firm with ₹1,000 cr market cap, ₹300 cr debt, ₹100 cr cash has EV = ₹1,200 cr.
• e.g.EV is used in EV/EBITDA because it is capital-structure neutral.

Net profit attributable to equity holders divided by number of equity shares.

• e.g.₹100 cr profit ÷ 10 cr shares = EPS ₹10.
• e.g.Diluted EPS factors in convertible instruments and is lower than basic EPS.

Total dividend declared divided by number of shares.

• e.g.₹50 cr dividend ÷ 10 cr shares = DPS ₹5.
• e.g.A company raising DPS from ₹4 to ₹6 signalling confidence in cash flows.

Price per share ÷ EPS; how much investors pay per rupee of earnings. High P/E suggests high growth expectations.

• e.g.Share ₹200, EPS ₹10 → P/E 20×.
• e.g.A fast-growing IT firm at P/E 35× vs a utility at P/E 12×.

Market cap ÷ revenue; useful for loss-making or early-stage firms with no earnings.

• e.g.A startup with no profit valued at 5× sales.
• e.g.Comparing two retailers on P/S when margins differ.

Price per share ÷ book value per share; common for banks/financials and asset-heavy firms.

• e.g.A bank at P/BV 1.5× means price is 1.5 times net worth.
• e.g.P/BV below 1 may indicate undervaluation or distress.

Shares carrying different (usually fewer) voting rights than ordinary shares, often issued at a discount with higher dividends.

• e.g.Tata Motors DVR shares historically traded at a discount to ordinary shares.
• e.g.DVRs letting promoters raise equity without diluting control.

The fixed annual interest a bond pays, expressed as % of face value.

• e.g.A ₹1,000 FV bond with 7% coupon pays ₹70 per year.
• e.g.Zero-coupon bonds pay no coupon and are issued at a discount.

The total return (IRR) if a bond is held to maturity, equating present value of all cash flows to its current price. Most comprehensive yield measure.

• e.g.A bond bought below par has YTM higher than its coupon rate.
• e.g.When market rates rise, bond price falls and YTM rises.

Annual coupon divided by current market price of the bond; ignores capital gain/loss and reinvestment.

• e.g.₹80 coupon ÷ ₹1,000 price = 8% current yield.
• e.g.If the same bond falls to ₹800, current yield rises to 10%.

Total return over the period an asset is held, including income and capital gain.

• e.g.Buy at ₹100, get ₹5 income, sell at ₹110 → HPR = 15%.
• e.g.Comparing HPR across different holding lengths needs annualization.

Weighted-average time to receive a bond's cash flows; a measure of interest-rate sensitivity. Usually less than maturity.

• e.g.A zero-coupon bond's duration equals its maturity.
• e.g.Higher-coupon bonds have lower duration than low-coupon ones of same maturity.

Estimates % change in bond price for a 1% change in yield; derived from Macaulay duration.

• e.g.Modified duration 4 means a 1% rate rise drops price ~4%.
• e.g.Longer-duration bonds are more volatile when rates move.

Estimating a security's intrinsic value by studying economy, industry and company fundamentals (financials, management, growth).

• e.g.Valuing a stock using DCF on its projected cash flows.
• e.g.Comparing a company's P/E to peers to judge over/undervaluation.

Forecasting prices by studying past price and volume patterns on charts, assuming history repeats and trends persist.

• e.g.Reading a head-and-shoulders pattern to anticipate a reversal.
• e.g.Using a 50-day moving average crossover as an entry signal.

Analysis starting from the macro economy → industry → company; narrows from broad to specific.

• e.g.First judging GDP and rates, then picking the strongest sector, then the best stock in it.
• e.g.Avoiding cyclicals near a slowdown identified at the economy level.

Analysis starting from individual company fundamentals, giving less weight to macro factors.

• e.g.A stock-picker buying a great business regardless of the economic cycle.
• e.g.Finding an undervalued small-cap on its own merits.

MNPI obtained from an insider; using it to trade/recommend is illegal.

• e.g.Acting on a tip about unannounced results from a company employee.
• e.g.An analyst recommending a stock based on leaked board decisions.

Forming a view by combining many pieces of public and non-material non-public information; legitimate research, not insider trading.

• e.g.Building a sales estimate from dealer checks, public filings, and industry data.
• e.g.Inferring a slowdown from publicly visible declining footfalls and inventory.

Total market value of all final goods and services produced within a country in a period; the key measure of economic output.

• e.g.Real GDP growth of 7% signalling a strong expansion.
• e.g.Comparing nominal vs real GDP to strip out inflation.

Total income earned by a nation's residents (e.g., GNP/NNP); reflects economic well-being.

• e.g.Rising per-capita income widening the consumer market.
• e.g.National income data guiding sector demand forecasts.

Savings fund investment, which drives capital formation and growth; their balance shapes interest rates.

• e.g.A high household savings rate channelled into infrastructure investment.
• e.g.Falling savings raising the cost of capital.

A sustained rise in the general price level. CPI tracks retail/consumer prices; WPI tracks wholesale prices.

• e.g.CPI rising to 6% prompting the RBI to hold or hike rates.
• e.g.WPI used to deflate industrial output figures.

The cost of borrowing money; influenced by RBI policy and inflation. Affects discount rates and valuations.

• e.g.Rate cuts boosting rate-sensitive sectors like real estate and autos.
• e.g.Higher rates lowering the present value of future cash flows in DCF.

Share of the labour force without work but seeking it; an indicator of economic slack.

• e.g.Rising unemployment signalling weak demand ahead.
• e.g.Low unemployment fuelling wage growth and inflation.

Government use of taxation and spending to influence the economy; reflected in the Union Budget.

• e.g.Increased capex spending stimulating construction and capital goods.
• e.g.Higher taxes cooling an overheating economy.

RBI's management of money supply and interest rates (repo rate, CRR, etc.) to control inflation and support growth.

• e.g.RBI cutting the repo rate to spur borrowing.
• e.g.Raising CRR to drain excess liquidity.

Price of one currency in terms of another; affects exporters, importers and inflation.

• e.g.A weaker rupee helping IT exporters' earnings.
• e.g.Rupee depreciation raising the cost of crude imports.

When a country's imports exceed its exports; part of the current account.

• e.g.A widening trade deficit pressuring the currency.
• e.g.High oil imports worsening India's trade balance.

Recurring expansion and contraction in economic activity, with secular (long), cyclical (medium) and seasonal (short) trends.

• e.g.Secular: decades-long shift to digital services.
• e.g.Seasonal: higher FMCG sales during festivals.

A shift of value/profit from one business model or entity to another as technology or customer needs change.

• e.g.Value migrating from feature phones to smartphones.
• e.g.Print media losing advertising value to digital platforms.

Stages an industry passes through: pioneering/growth, expansion/maturity, and decline/stagnation.

• e.g.EV makers in a high-growth phase; ICE auto parts maturing.
• e.g.Landline telephony in decline as mobile dominates.

Framework assessing industry attractiveness via: competitive rivalry, threat of new entrants, threat of substitutes, bargaining power of buyers, and of suppliers.

• e.g.High entry barriers (capital, licences) protecting incumbents in oil refining.
• e.g.Strong buyer power squeezing auto-component supplier margins.

Scanning Political, Economic, Social, Technological, Legal and Environmental macro factors affecting an industry.

• e.g.New emission norms (Legal/Environmental) reshaping the auto sector.
• e.g.Demographic shifts (Social) expanding the healthcare market.

Classifies business units by market growth and market share into Stars, Cash Cows, Question Marks and Dogs.

• e.g.A high-share, high-growth product as a 'Star'.
• e.g.A mature, high-share, low-growth product as a 'Cash Cow'.

Structure–Conduct–Performance: industry structure shapes firm conduct, which determines performance.

• e.g.A concentrated (oligopoly) structure enabling pricing discipline and high profits.
• e.g.Fragmented structure forcing price competition and thin margins.

Industry-specific operating metrics used to judge performance beyond financials.

• e.g.ARPU for telecom; same-store-sales growth for retail.
• e.g.Occupancy rate for hotels; load factor for airlines.

Tax levied directly on income/wealth of a person or company; burden cannot be shifted.

• e.g.Corporate income tax on a company's profits.
• e.g.Capital gains tax on an investor's stock profits.

Tax on goods/services where the burden is passed to the end consumer.

• e.g.GST charged on a product at point of sale.
• e.g.Customs duty on imported electronics raising retail prices.

How a company creates, delivers and captures value — its products, customers, revenue streams and cost structure.

• e.g.A subscription SaaS model with recurring revenue.
• e.g.A razor-and-blades model: cheap printers, profitable ink cartridges.

A firm's ability to raise prices without losing customers, indicating a strong competitive position.

• e.g.A premium brand raising prices yearly with little volume loss.
• e.g.A monopoly utility passing cost increases to consumers.

A durable edge protecting a firm's profits from competitors (brand, scale, network effects, switching costs, patents).

• e.g.A network effect making a marketplace stronger as users grow.
• e.g.High switching costs locking enterprise software customers in.

Assessing a firm's internal Strengths and Weaknesses and external Opportunities and Threats.

• e.g.Strength: strong balance sheet; Threat: new low-cost competitor.
• e.g.Opportunity: export expansion; Weakness: customer concentration.

Systems and practices ensuring a company is run fairly, transparently and accountably for all stakeholders.

• e.g.An independent, diverse board overseeing management.
• e.g.Robust disclosure and minority-shareholder protection.

The stake held by a company's founders/controlling group; pledging and changes signal risk or confidence.

• e.g.High promoter pledging of shares flagging financial stress.
• e.g.Promoters increasing stake signalling confidence.

An independent agency's opinion on an issuer's ability to repay debt (e.g., AAA to D).

• e.g.A bond downgraded from AA to A raising its borrowing cost.
• e.g.AAA-rated paper attracting the lowest yields.

Evaluating a company on Environmental, Social and Governance factors alongside financials.

• e.g.Penalising a polluter on the 'E' pillar.
• e.g.Rewarding strong board independence on the 'G' pillar.

A statement of a company's assets, liabilities and equity at a point in time; Assets = Liabilities + Equity.

• e.g.Reading current assets vs current liabilities to gauge liquidity.
• e.g.Spotting rising debt year-on-year on the liabilities side.

A statement of revenues, expenses and profits over a period (income statement).

• e.g.Tracking revenue growth and margin trends across years.
• e.g.Identifying one-off/exceptional items inflating profit.

Reports cash generated/used across Operating, Investing and Financing activities.

• e.g.Strong operating cash flow but heavy investing outflow during expansion.
• e.g.Profits high but operating cash flow weak — a red flag.

Earnings Before Interest, Tax, Depreciation and Amortization; a proxy for operating cash profitability.

• e.g.Comparing EBITDA margins across capital-intensive peers.
• e.g.EBITDA used in EV/EBITDA valuation.

Profitability ratios: gross (after COGS), operating (after operating costs), net (after all costs/taxes), each ÷ sales.

• e.g.A retailer with 30% gross but 4% net margin.
• e.g.Net margin falling due to higher interest costs.

Net profit ÷ shareholders' equity; how efficiently equity generates profit.

• e.g.₹100 cr profit on ₹500 cr equity = 20% ROE.
• e.g.Comparing two banks on ROE to judge quality.

EBIT ÷ capital employed (equity + debt); returns to all capital providers, capital-structure neutral.

• e.g.A firm with ROCE above its cost of capital creating value.
• e.g.ROCE preferred over ROE for highly leveraged firms.

Net profit ÷ total assets; efficiency of asset use in generating profit.

• e.g.A bank's ROA of 1.5% considered strong.
• e.g.Asset-heavy manufacturers having lower ROA than asset-light firms.

Total debt ÷ shareholders' equity; a leverage measure of financial risk.

• e.g.D/E of 2 meaning ₹2 debt per ₹1 equity — high leverage.
• e.g.Low D/E giving resilience in a downturn.

EBIT ÷ interest expense; ability to service interest from operating profit.

• e.g.Coverage of 1.2× signalling stress in paying interest.
• e.g.Coverage of 8× indicating comfortable debt servicing.

Current assets ÷ current liabilities; short-term liquidity. ~1.5–2 often considered healthy.

• e.g.Current ratio of 0.8 — possible liquidity strain.
• e.g.A ratio of 2 showing comfortable short-term solvency.

(Current assets − inventory) ÷ current liabilities; stricter liquidity measure excluding slow-moving stock.

• e.g.A firm with high inventory having a strong current but weak quick ratio.
• e.g.Service firms naturally showing quick ≈ current ratio.

Measure how well assets/working-capital are used (inventory, debtors, asset turnover).

• e.g.High inventory turnover meaning fast stock rotation.
• e.g.Rising debtor days signalling slower collections.

Decomposes ROE into net margin × asset turnover × equity multiplier to reveal its drivers.

• e.g.Two firms with same ROE — one from margins, one from leverage.
• e.g.Spotting that rising ROE is driven by debt, not efficiency.

Current assets minus current liabilities; funds tied up in day-to-day operations.

• e.g.Negative working capital in retail (suppliers fund the business).
• e.g.Bloated working capital locking cash in receivables/inventory.

A possible obligation depending on a future event (e.g., lawsuits, guarantees); disclosed in notes, not on the balance sheet.

• e.g.A pending tax dispute disclosed as a contingent liability.
• e.g.Corporate guarantees given for a subsidiary's loan.

Distribution of profits to shareholders; can be interim or final, paid out of profits/reserves.

• e.g.A company declaring ₹5 per share final dividend.
• e.g.An interim dividend paid mid-year before annual results.

Offer of new shares to existing shareholders in proportion to their holdings, usually at a discount.

• e.g.A 1:5 rights issue letting you buy 1 new share per 5 held.
• e.g.A company raising capital via rights to fund expansion.

Free additional shares issued to shareholders by capitalising reserves; no cash inflow, price adjusts down.

• e.g.A 1:1 bonus doubling your shares and halving the price.
• e.g.Bonus issue improving liquidity by raising share count.

Splitting each share into more shares with lower face value; total value unchanged, improves affordability.

• e.g.A ₹10 FV share split into five ₹2 FV shares.
• e.g.Price falling from ₹2,000 to ₹400 after a 5-for-1 split.

Combining multiple shares into fewer shares with higher face value; opposite of a split.

• e.g.Ten ₹1 shares consolidated into one ₹10 share.
• e.g.A penny stock consolidating to lift its low price.

Combining companies (merger) or one buying another (acquisition) to gain scale, synergies or market access.

• e.g.Two banks merging to expand their branch network.
• e.g.A large firm acquiring a startup for its technology.

Separating a business unit into an independent listed company to unlock value.

• e.g.A conglomerate spinning off its FMCG arm into a separate listed entity.
• e.g.Shareholders receiving shares of the demerged company.

A company repurchasing its own shares, reducing share count and often returning surplus cash.

• e.g.A cash-rich IT firm buying back shares via tender offer.
• e.g.Buyback boosting EPS by shrinking the share base.

Removing a company's shares from an exchange; can be voluntary or compulsory.

• e.g.A promoter buying out public shareholders to take the firm private.
• e.g.Compulsory delisting for regulatory non-compliance.

Paying for an acquisition by issuing the acquirer's shares to the target's shareholders instead of cash.

• e.g.A merger settled by giving 2 acquirer shares per target share.
• e.g.An all-stock deal avoiding cash outflow.

Record date sets who is eligible for a corporate action; ex-date is when the share trades without that benefit (price adjusts).

• e.g.Buying before the ex-dividend date to receive the dividend.
• e.g.Price dropping by the dividend amount on the ex-date.

Price is what the market quotes; value is the intrinsic worth from fundamentals. Investing exploits gaps between them.

• e.g.A stock priced ₹250 but valued at ₹350 by DCF (undervalued).
• e.g.An overhyped IPO priced far above its intrinsic value.

Intrinsic-value method discounting projected future cash flows to present value at an appropriate discount rate.

• e.g.Valuing a firm by discounting 10 years of FCFF plus a terminal value.
• e.g.A higher discount rate lowering the DCF value.

Cash available to all capital providers after operating costs, taxes and reinvestment; discounted at WACC.

• e.g.FCFF = EBIT(1−t) + D&A − Capex − ΔWC.
• e.g.Used in enterprise-level DCF valuation.

Cash available to equity holders after debt servicing; discounted at cost of equity.

• e.g.FCFE used to value the equity directly.
• e.g.FCFE = FCFF − Interest(1−t) + Net Borrowing.

Blended cost of equity and debt weighted by their proportions; the discount rate for FCFF.

• e.g.A firm with cheap debt lowering its WACC.
• e.g.Using WACC as the hurdle rate for projects.

Value of all cash flows beyond the explicit forecast period, often via the Gordon growth model.

• e.g.Terminal value forming the bulk of a high-growth firm's DCF.
• e.g.Using a perpetual growth rate of 4% for terminal value.

Valuing a firm by comparing multiples (P/E, EV/EBITDA) against peers or its own history.

• e.g.Saying a stock is cheap because its P/E is below the sector average.
• e.g.Using transaction multiples from recent M&A deals.

P/E divided by earnings growth rate; adjusts P/E for growth. PEG ~1 often seen as fairly valued.

• e.g.P/E 30 with 30% growth gives PEG 1.
• e.g.A high-P/E stock looking reasonable on a low PEG.

Enterprise value ÷ EBITDA; capital-structure-neutral multiple widely used for comparison.

• e.g.Comparing telcos on EV/EBITDA despite different debt levels.
• e.g.A lower EV/EBITDA than peers suggesting undervaluation.

Enterprise value ÷ revenue; used for loss-making or early-stage firms.

• e.g.Valuing a pre-profit SaaS firm on EV/Sales.
• e.g.Comparing revenue multiples across high-growth peers.

Value of assets minus liabilities, per share/unit; used for funds, holding and asset-heavy firms.

• e.g.A mutual fund unit priced at its NAV.
• e.g.Valuing a real-estate firm at the NAV of its properties.

Valuing each business segment separately and adding them to get total value; suits conglomerates.

• e.g.Valuing a group's FMCG, finance and telecom arms separately, then summing.
• e.g.SOTP revealing hidden value in an undervalued subsidiary.

Trading multiples come from current market prices of listed peers; transaction multiples come from prices paid in past M&A deals (include a control premium).

• e.g.Using listed-peer P/E as a trading multiple.
• e.g.Applying an acquisition EV/EBITDA as a transaction multiple.

Drivers of commodity supply: production, capacity, weather, geopolitics, inventories.

• e.g.A drought cutting wheat supply and lifting prices.
• e.g.OPEC output cuts tightening crude supply.

Drivers of commodity demand: industrial activity, consumption, income, substitution.

• e.g.Strong Chinese construction lifting copper demand.
• e.g.Festive jewellery demand raising gold consumption.

Measures USD strength against major currencies; commodities (priced in USD) usually move inversely.

• e.g.A stronger dollar pressuring gold and crude prices.
• e.g.A weaker dollar boosting dollar-priced commodities.

Data on planting, yields and weather that drive agricultural commodity prices.

• e.g.A USDA report cutting corn yield estimates, lifting prices.
• e.g.Monsoon forecasts moving Indian agri-commodity prices.

Stock levels signalling supply-demand balance; low inventory is bullish, high is bearish.

• e.g.Falling crude inventories pushing oil prices up.
• e.g.Record warehouse stocks weighing on metal prices.

Using futures/options to lock prices and offset price risk in physical commodity exposure.

• e.g.A refiner hedging crude purchases with futures.
• e.g.A farmer locking a selling price ahead of harvest.

Proportion of a position hedged; optimised using correlation and volatility of spot vs futures.

• e.g.A hedge ratio of 0.8 hedging 80% of exposure.
• e.g.Computing the optimal hedge ratio from price correlations.

Contango: futures price above spot (rising curve). Backwardation: futures below spot (falling curve).

• e.g.A commodity in contango due to storage costs.
• e.g.Backwardation signalling tight near-term supply.

'Return OF' is getting your principal back (safety); 'return ON' is the profit/gain earned on it.

• e.g.A safe FD prioritising return of capital.
• e.g.An equity investment chased for return on capital.

Total gain over the period as a % of the amount invested, not annualised.

• e.g.Buy ₹100, sell ₹120 → 20% simple return.
• e.g.Comparing simple returns of two stocks over the same period.

A period return converted to a yearly equivalent for comparison.

• e.g.A 10% return in 6 months annualising to ~21%.
• e.g.Annualising returns of investments of different lengths.

The constant annual rate that grows an investment from start to end value over n years; smooths volatility.

• e.g.₹1,00,000 growing to ₹2,00,000 in 5 years → CAGR ≈ 14.9%.
• e.g.₹50,000 reaching ₹80,000 in 3 years → CAGR ≈ 16.96%.

Statistical measure of dispersion of returns around the mean; the most common measure of total risk/volatility.

• e.g.A fund with higher SD being more volatile.
• e.g.Using SD to compare riskiness of two portfolios.

The square of standard deviation; average squared deviation of returns from the mean.

• e.g.Variance underlying the SD calculation.
• e.g.Portfolio variance accounting for covariance between assets.

Sensitivity of a stock's returns to the market; measures systematic (non-diversifiable) risk. Market beta = 1.

• e.g.Beta 1.5 meaning the stock moves ~1.5× the market.
• e.g.A defensive stock with beta 0.6 being less volatile than the market.

Systematic (market) risk is undiversifiable; unsystematic (firm-specific) risk can be diversified away.

• e.g.Interest-rate shocks as systematic risk.
• e.g.A factory fire as unsystematic risk reduced by holding many stocks.

Testing how a valuation/output changes when key assumptions (growth, margin, discount rate) change.

• e.g.Re-running a DCF with growth at 4% vs 6%.
• e.g.Stress-testing earnings under different demand scenarios.

Buying at a price well below estimated intrinsic value to cushion against errors and bad luck.

• e.g.Buying at ₹70 a stock valued at ₹100 (30% margin of safety).
• e.g.A larger margin of safety demanded for uncertain businesses.

Risk premium earned per unit of total risk (standard deviation); higher is better.

• e.g.A fund with Sharpe 1.2 beating one with 0.8 risk-adjusted.
• e.g.Comparing portfolios on Sharpe rather than raw return.

Risk premium per unit of systematic risk (beta); higher is better.

• e.g.Using Treynor for well-diversified portfolios.
• e.g.Ranking funds by excess return per unit of beta.

Return above what CAPM predicts for the portfolio's risk; positive alpha = outperformance.

• e.g.A manager generating +2% alpha after adjusting for risk.
• e.g.Negative alpha indicating underperformance vs risk taken.

Systematic psychological errors (overconfidence, anchoring, herding, loss aversion, recency) that distort investment decisions.

• e.g.Herding into a hot IPO because everyone is buying.
• e.g.Loss aversion making an investor hold a losing stock too long.

Ease of buying/selling a stock without moving its price; measured by volume, impact cost and bid-ask spread.

• e.g.A large-cap with tight spreads being highly liquid.
• e.g.A thinly traded small-cap with high impact cost.

A good research report is objective, clear, well-researched, balanced (risks and rewards), timely, and transparent on assumptions and conflicts.

• e.g.A report stating both the bull and bear case with a clear recommendation.
• e.g.Disclosing the analyst's holdings and the firm's banking relationships.

Using a structured checklist to ensure a report covers all critical elements consistently and avoids omissions.

• e.g.Ticking off business model, financials, valuation, risks and disclosures.
• e.g.A standard template reducing analyst oversight.

Mandatory statements of conflicts, holdings, ratings basis and risk factors to protect investors.

• e.g.A footnote disclosing the analyst owns the stock.
• e.g.Stating the rating definition and target-price horizon.

The statutory regulator of India's securities market; protects investors and regulates intermediaries including Research Analysts.

• e.g.SEBI registering and inspecting Research Analysts.
• e.g.SEBI penalising market manipulation.

India's central bank and monetary authority; regulates banks, money supply and interest rates.

• e.g.RBI setting the repo rate in its monetary policy.
• e.g.RBI regulating NBFCs and the banking system.

Administers the Companies Act and corporate governance; oversees company registration and compliance.

• e.g.MCA enforcing the Companies Act, 2013.
• e.g.Companies filing annual returns with the MCA.

Insurance Regulatory and Development Authority of India; regulates the insurance sector.

• e.g.IRDAI approving insurance products and pricing.
• e.g.Regulating insurers' solvency and conduct.

Pension Fund Regulatory and Development Authority; regulates pensions (e.g., NPS).

• e.g.PFRDA overseeing the National Pension System.
• e.g.Regulating pension fund managers.

Insolvency and Bankruptcy Board of India; regulates the insolvency resolution process under the IBC.

• e.g.IBBI overseeing resolution professionals.
• e.g.Administering the corporate insolvency framework.

Governs stock exchanges and trading in securities; provides for recognition and regulation of exchanges.

• e.g.Defining 'securities' and regulating contracts in them.
• e.g.Empowering recognition of stock exchanges.

The statute establishing SEBI and giving it powers to protect investors and regulate the market.

• e.g.Granting SEBI rule-making and enforcement powers.
• e.g.Basis for SEBI's investigation and penalty actions.

The rules governing registration, qualifications, conduct, disclosures and conflict management for Research Analysts.

• e.g.Requiring RAs to register and meet qualification norms.
• e.g.Mandating disclosure of conflicts and holdings in reports.

A unified framework for time-bound resolution of insolvency of companies and individuals.

• e.g.A stressed company undergoing a time-bound resolution process.
• e.g.Creditors recovering dues through the IBC mechanism.

Principles RAs must follow: integrity, independence, no MNPI misuse, professionalism, fair dealing and disclosure.

• e.g.An RA refusing to issue a biased report for banking fees.
• e.g.Maintaining records and avoiding misleading recommendations.

An exchange mechanism placing additional curbs on securities with poor fundamentals/abnormal price moves to protect investors.

• e.g.A penny stock under GSM facing trade-to-trade restrictions.
• e.g.Higher margins imposed on a GSM-listed stock.

Short-term surveillance on securities showing high volatility/volume variation to curb speculation.

• e.g.A stock added to ASM after a sharp, unexplained surge.
• e.g.Increased margins on ASM securities.

A document stating investors' rights, services offered and grievance-redressal timelines.

• e.g.An RA displaying the Investor Charter to clients.
• e.g.Disclosing complaint data periodically.

Cybersecurity and Cyber Resilience Framework; SEBI norms requiring regulated entities to safeguard systems and data.

• e.g.An RA firm implementing access controls and incident reporting.
• e.g.Periodic cyber audits under the framework.

Forecasting prices from historical price and volume, assuming prices discount all information and move in trends that repeat.

• e.g.Using chart patterns and indicators to time entries.
• e.g.Relying on trends rather than financial statements.

The simplest chart joining closing prices over time; shows the overall trend cleanly.

• e.g.A line chart of the NIFTY's daily closes over a year.
• e.g.Using a line chart to spot the broad direction.

Shows Open, High, Low and Close for each period as a vertical bar with ticks.

• e.g.Reading the day's range and close from an OHLC bar.
• e.g.Comparing daily volatility across bars.

Shows OHLC with a 'body' (open-to-close) and 'wicks'; colour shows up/down. Basis of many patterns.

• e.g.A long green candle showing strong buying.
• e.g.A small body with long wicks signalling indecision.

Plots price moves as columns of X's (rises) and O's (falls), filtering out time and small moves.

• e.g.Using P&F to focus on significant price changes only.
• e.g.Identifying breakouts without time-based noise.

Builds 'bricks' of a fixed price size, ignoring time; highlights trends and filters minor moves.

• e.g.A series of green Renko bricks confirming an uptrend.
• e.g.Renko reducing whipsaws in choppy markets.

A modified candlestick using averaged prices to smooth noise and show trend strength.

• e.g.A run of strong Heikin-Ashi candles indicating a steady trend.
• e.g.Smoothed candles helping ride a trend longer.

Foundational TA theory: averages discount everything, the market has three trends, primary trends have three phases, averages must confirm, volume confirms trend, and a trend persists until reversal.

• e.g.Industrial and transport averages confirming a bull market.
• e.g.Volume rising in the direction of the primary trend.

Primary = long-term (months–years); Secondary = medium corrections; Tertiary = short-term daily noise.

• e.g.A multi-year bull market as the primary trend.
• e.g.A few-week pullback as a secondary reaction within it.

Support is a price level where buying tends to halt falls; resistance is where selling tends to halt rises.

• e.g.A stock bouncing repeatedly off ₹500 support.
• e.g.Price stalling near ₹600 resistance before a breakout.

Single candles with small bodies and long lower shadows. A hammer (after a downtrend) is bullish; a hanging man (after an uptrend) is bearish.

• e.g.A hammer at the bottom of a decline hinting at a reversal up.
• e.g.A hanging man at a top warning of a turn down.

A two-candle reversal where the second candle's body fully engulfs the first; bullish at bottoms, bearish at tops.

• e.g.A large green candle engulfing a prior red one — bullish.
• e.g.A red candle engulfing a prior green one at a top — bearish.

Two-candle reversals: dark cloud cover is bearish (a red candle closing into a prior green body); piercing is its bullish mirror.

• e.g.Dark cloud cover signalling a top after a rally.
• e.g.A piercing pattern signalling a bottom after a fall.

Three-candle reversals: morning star (bullish bottom) and evening star (bearish top), with a small middle candle.

• e.g.A morning star marking the end of a downtrend.
• e.g.An evening star marking the end of an uptrend.

Continuation patterns (symmetrical, ascending, descending) where price coils before breaking out in the trend's direction.

• e.g.An ascending triangle breaking out upward.
• e.g.A symmetrical triangle resolving with a strong move.

An average of prices over a window (simple or exponential) that smooths data and reveals trend; crossovers give signals.

• e.g.A 50-day MA crossing above the 200-day (golden cross).
• e.g.Price holding above its rising 20-day MA in an uptrend.

A momentum oscillator (0–100); above 70 is overbought, below 30 oversold.

• e.g.RSI at 80 warning a stock is overbought.
• e.g.RSI bouncing from 25 signalling a possible rebound.

Moving Average Convergence Divergence; a trend-momentum indicator using the difference of two EMAs and a signal line.

• e.g.A bullish MACD crossover above the signal line.
• e.g.MACD divergence warning of weakening momentum.

A moving average with bands at ±2 standard deviations; bands widen with volatility and narrow when it's low.

• e.g.Price touching the upper band in a strong move.
• e.g.A 'squeeze' (narrow bands) preceding a breakout.

The number of shares traded; confirms the strength of price moves and trends.

• e.g.A breakout on high volume being more reliable.
• e.g.Rising prices on falling volume warning of weakness.