If you’ve ever heard someone say, ‘The market is bullish’ and didn’t know what it meant, you’re not alone. Many first-time investors often feel confused when they hear stock market terms.
The good news? Understanding the basic stock market terms for Indian investors isn’t as complicated as it seems. In fact, once you learn the language, you’ll feel more confident reading financial news, watching market updates, or even making your first investment.
This guide breaks down common stock market terms with examples. Think of it as your financial dictionary, tailored for your real-world goals.
Bull Market (Bullish)
When stock prices are rising and people feel positive about the future, we call it a bull market.
Example: If your online mobile accessory store sees growing orders every week, you’d feel optimistic about future sales. That’s exactly how investors feel during a bull market—hopeful and ready to invest more.
Bull markets often attract new investors, but always look at the long-term picture before jumping in.
Bear Market (Bearish)
When stock prices are falling and people expect more declines, it’s called a bear market.
Example: Imagine a small manufacturing unit faces reduced demand. Orders drop, and the business owner becomes cautious. This is how the stock market feels during bearish phases.
The term “bear” comes from how a bear attacks—swiping downward. That’s why it represents falling prices.
Market Trend
Market trends show the general direction of stock prices.
- Uptrend: Prices move upward (bullish)
- Downtrend: Prices move downward (bearish)
- Sideways: Prices stay in a narrow range without moving clearly up or down
Just like a bakery owner tracks customer demand before adding a new product, investors track market trends before making trading decisions.
Face Value in Shares
Face value (FV) is the base price of a share, decided when the company issues it. It doesn’t change daily and is used mainly during events like dividends or stock splits.
Example: If a company has a face value of ₹5 and announces a ₹63 dividend, then the dividend is 1260% (63 ÷ 5 × 100).
Face value is useful in understanding dividend percentages—not the current stock price.
52-Week High/Low and All-Time High/Low
- 52-week high/low: Highest and lowest stock price in the past year
- All-time high/low: Highest and lowest price ever since the stock got listed
Example: If a mobile repair chain’s stock hits its 52-week high, it usually shows strong demand and bullish sentiment.
Many traders see new highs as momentum signals—but always combine this with volume and trend analysis.
Upper and Lower Circuits
Stock exchanges set upper and lower circuit limits to stop extreme price movements in a day.
- Upper circuit: Highest a stock can rise in a single day
- Lower circuit: Lowest it can fall
Example: If a small startup’s stock reacts to a big news event, the exchange might cap its price movement at 5% to prevent panic buying or selling.
Stocks hitting circuits often draw attention—but they are risky. Stay alert.
Long Position (Bullish Trade)
A long position means buying a stock expecting it will go up.
Example: A freelancer buys shares of a company at ₹1,400, hoping to sell at ₹1,500. If the price rises, they earn a profit.
Short Position (Bearish Trade)
A short position is the opposite. You sell first, expecting to buy back at a lower price.
Example: An online seller short-sells a company’s stock at ₹425. Later, they buy it back at ₹405. Profit: ₹20 per share.
In the cash market, short-selling must be closed (squared off) the same day. Longer-term short trades happen in derivatives.
Square Off
Square off means closing your trade:
- If you bought shares earlier, sell to square off (long position)
- If you sold shares earlier, buy back to square off (short position)
Example: A bakery owner buys 100 shares of a company in the morning and sells them in the afternoon—that’s squaring off.
Intraday Positions
Intraday trading means buying and selling within the same trading day.
Example: A mobile repair shop owner buys shares at ₹2,500 in the morning and sells them at ₹2,540 before the market closes. That ₹40 gain per share is from an intraday trade.
All short positions in the cash market are automatically intraday. They must be squared off before the market closes.
OHLC
OHLC stands for:
- Open: Price at market opening
- High: Day’s highest price
- Low: Day’s lowest price
- Close: Price at day’s end
Example: a listed company’s stock price on June 17: ₹3,210 (open), ₹3,280 (high), ₹3,195 (low), ₹3,250 (close).
OHLC data helps in technical analysis and reading candlestick charts.
Trading Volume
Volume shows how many shares were traded during the day.
Example: If a company’s volume is 5,33,819, that’s how many shares changed hands.
High volume confirms price movement strength—just like more foot traffic in your store confirms growing interest.
Market Segments
Knowing where you trade is important:
- Capital Market (CM): For regular buying/selling of shares and ETFs
- Futures & Options (FO): For advanced trades using leverage—higher risk and reward
- Currency Derivatives (CDS): Trading currency pairs (e.g., USD/INR)
- Wholesale Debt Market (WDM): Bonds and government securities—less relevant for beginners
Beginners should stick to the Capital Market segment until they understand risks in F&O.
Conclusion: Start Small, Grow Smart
Whether you’re a salaried individual, freelancer planning to invest your first ₹5,000, a bakery owner saving for your child’s education, or an online seller looking to grow wealth—these terms form the foundation of your investing journey.
Start by observing trends, reading OHLC data, and watching how volume changes. Over time, phrases like “square off” or “bull market” will feel like second nature. You don’t need to be a finance expert to build wealth. You just need the right guidance, and the willingness to begin.
