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10 terms related to an online demat account

Demat Account | August 29

When you open an online demat account, you are introduced to a world of new concepts and terminologies that exist in the investment domain. It definitely takes time to learn them, understand them and get used to them as a seasoned investor. You receive ample amount of resources provided by your brokerage firm and from various online resources to learn about the market.

Here are 10 terms related stock markets when you open an online demat account:

1. Indices

Stock Market Index or Indices is a numerical value or measurement to determine the value of a section in the stock market. The indices help investors and finance managers to explain the stock market in a better manner. The stock market index also aids in calculating the return on specific stocks in the market.

 

BSE Sensex, NSE Nifty, CNX IT etc. are some of the stock market indices in India.

 

2. Settlement

A settlement takes place when the securities are delivered after execution against the payment for the purchased securities. The stock market settlements are cleared as per the settlement cycle provided in the settlement schedule of the stock exchanges.

 

In India, for demat share settlements, the National Securities Clearing Corporation Ltd (NSCCL) follows a T+2 rolling settlement cycle wherein T is the Trading Day. With an online demat account, you can perform online trading from anywhere, and at any time, as per your convenience.

 

3. Margins/Limits

When you want to buy more shares as an investor, you can borrow money from your broker to buy more shares using a margin account.

 

4. Dividends

The part of specific profits that a listed company gives to its shareholder at regular intervals is called a dividend. Many online demat account holders who have invested in well-performing listed companies consider the dividends as their alternate source of income.

 

5. Beta

In the stock market, beta is a measurement to determine a stock’s performance with respect to the market returns. Beta of the market is 1. The beta value fluctuates with the market movements. Investors look for stocks with high beta because their volatility can probably yield better returns.

 

6. EPS

EPS or Earnings Per Share is a financial ratio in the shareholder’s equity section of a company’s financial report. It helps you determine the profit earned by the company using shareholder’s equity. Studying the EPS of a company will help you to understand the performance of the company’s shares over the years and take better investment decisions.

 

7. Day Trading

When you buy or sell your securities using your online demat account on the same day before the market closes, that kind of a trading activity is known as Day Trading. Generally, day trading is performed by experienced investors on a regular basis.

 

8. Blue Chip Stocks

The stocks of blue chip listed companies that have a good track record and have high potential to perform well are referred to as blue chip companies. Online demat account holders try to hold a lot of blue chip stocks for long term investments to earn great returns and to earn from dividends as well.

 

9. Bear Market

The market condition when there has been a consistent fall in the prices of assets for months/years that creates a negative vibe among investors is called a bear market. In a bear market, most investors tend to sell off the securities in their online demat account to avoid suffering from losses due to a possible market crash.

 

10. Bull Market

When the price of assets in the securities market show consistent growth for a long time, the market condition is known as a bull market. The market shows the sign of growth in an economy with companies performing really well. In this market, investors are willing to invest more and add more shares to their online demat account. There are higher chances of earning better returns in a bull market.

While there are many more terms to understand the stock markets, these are a handful to get started in investing. You can refer to the glossary of stock terms on moneycontrol.com to learn more terms. Here’s the link: http://www.moneycontrol.com/glossary/stocks/

To open an online demat account with a trusted service provider like Tradebulls, click here. To know more about online demat account and online trading services by Tradebulls, visit https://www.tradebulls.in/products-and-services

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Dinesh Thakkar is the Founder & Chairman of Tradebulls Group, one of the fastest growing Indian stock broking house. Mr. Thakkar has over 20 years of rich experience in the Capital & Commodity Market.

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