Browsing articles in "Market Terminology"

Circular Trading:

Fundamental analysis

Circular trading is a fraudulent trading practice which aims at artificially creating high trading volumes and affecting the price of the stock. It is a practice whereby two or more brokers/clients enter the buy or sell order who know beforehand that a similar offsetting order for the same stock at a similar price and quantity have been entered or is to be entered at the same time by some another person. For instance if two […]

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Fiscal Deficit:

Fundamental analysis

It is defined as the difference between the government’s total revenue(excluding borrowings) and total expenditure for a specified financial year. When the total expenditure exceeds total revenue then the figure obtained by taking the difference between the two is said to be fiscal deficit; and when total revenue exceeds total expenditure of the government then the figure so obtained is said to be the fiscal surplus. Higher fiscal deficit is considered to be riskier for […]

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Put call ratio:

Fundamental analysis

Put call ratio is one of the widely used ratios to indicate the market sentiments. It is a contrarian indicator. It measures the total volume of put options traded against the total volume of call options traded. The ratio indicates when investors are bullish on markets and when they are bearish for them. There are various types of put call ratios and the way to analyse them also differs from analyst to analyst. Calculation of […]

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BSE Sensex:

Fundamental analysis

Sensex is an index comprised of 30 representative companies of various sectors listed on BSE (Bombay Stock Exchange). The index is a representation of the combined performance of all the comprised companies on the basis of demand and supply forces of the stock market. To study the calculation and working of Sensex go to featured article “What is Sensex and how it works !!!”. The index BSE Sensex is comprised of the following 30 companies […]

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Buy-Back:

Fundamental analysis

Buy-back is the process when a company repurchases or buys it’s own shares from the existing shareholders. The companies go for the process of buy-back to support the stock price and also to park the additional funds available on the balance sheet. The company may buy-back its shares through either of the following methods: Open market buy-back From existing shareholders through book building The advantages of buy-back are: It increases the Earnings Per Share (EPS) […]

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Advance and decline index:

Fundamental analysis

Advance and decline index is an indicator that depicts the actual movement of the stocks at any particular moment. This indicator gives the number of stocks that have advanced in the price from their previous day’s close, to the number of stocks that have declined from their previous day’s close. Thus with the help of advance and decline index the actual performance of stocks could be seen. The index is calculated as a ratio by […]

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Divestment:

Fundamental analysis

Divestment refers to the sale of assets or existing business by an owner. Divestment may be done to satisfy certain needs such as financial need, regulatory need or ethical purposes. In India divestment process was started in 1991 with the introduction of LPG concept or with the liberalization of the Indian economy. The various objectives for divestment are: To obtain cash for some desired activities of business. To sell out unproductive branches or subsidiaries. To […]

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Sweat Equity:

Sweat equity refers to the equity created in a company as result of the owners’ hard work and efforts. When starting a company/business some partners contribute capital to earn their stake while others chose to put in their efforts in return of either low or no financial compensation. This is called as sweat equity. Sweat equity is sometimes referred to as “equity compensation” or “stock for services”. Thus cash stripped entrepreneurs prefer to collect sweat […]

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Exchequer:

Fundamental analysis

Exchequer is a government department responsible for collection and management of government revenues. The concept of exchequer was first evolved in United Kingdom. The name ‘Exchequer’ is derived from the table used for the calculation of taxes and goods in the medieval period.

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Fundamental analysis:

Fundamental analysis is the process of analysing the real worth of a stock or a business by looking at the fundamental level of the stock. Which means that to judge the stock’s real worth against it’s market value, the financial books are studied deeply. Such an analysis includes calculating various financial ratios and thus judging the health of a business. The underlying assumption taken here is; that stock market may misprice a security but the […]

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