Importand Terms in Stocks

1. BOOK VALUE -  Book value refers to the total amount a company would be worth if it liquidated its assets and paid back all its liabilities.

2.  DEBT EQUITY RATIO - The debt-to-equity ratio is a measure of the relationship between the capital contributed by creditors(Debt) and the capital contributed by shareholders.

3.EARNINGS PER SHARE -                 Net Profit - Dividends

                                                       Average Number of common shares

4. PRICE/EARNINGS RATIO - If the price of a share is Rs 100 and if the earning per share of a company is Rs 5. Then the P/E ratio of that company is 100/5 = 20. It is usually calculated on the basis of earnings of the last 4 quarters (Trailing P/E). Each industry has its own P/E.Thus it is a very useful ratio for comparison.

5. IPO -  An Initial public offering (IPO) or stock market launch is a type of public offering in which shares of stock in a company usually are sold to institutional investors that in turn sell to the general public, on a securities exchange (BSE/NSE), for the first time. Through this process, a private company transforms into a public company. Initial public offerings are used by companies to raise expansion capital, to possibly monetize the investments of early private investors, and to become publicly traded enterprises.

6. DIVIDEND YIELD - Dividend Yield = Annual Dividend / Current Stock Price

Let’s assume you own 1000 shares of KLM Ltd. It pays a dividend of Rs. 2 per year. The current stock price is Rs. 20. Thus dividend yield is 20/2 = 10% . It is good measure of your investment's productivity.

7. MARKET CAPITALISATION / MARKET CAP - It can be calculated by multiplying the total number of shares of the company with the current market price of 1 share. Based on Market cap , a company can be slotted as large cap, mid-cap, small cap, micro cap etc.

For eg : ASD company has 100,000 shares and its current market price is Rs. 50 ,  then the market cap of ASD is 100,000 x 50 = 50,00,000/-

8. SENSEX -

An abbreviation of the Bombay Exchange Sensitive Index (Sensex) - the benchmark index of the Bombay Stock Exchange (BSE). It is composed of 30 of the largest and most actively-traded stocks on the BSE. Each company has  different weight-age in the list. Initially compiled in 1986, the Sensex is the oldest stock index in India.

Basically its a figure indicating the relative prices of shares on the Mumbai (Bombay) Stock Exchange.

Current Sensex list - http://www.bseindia.com/sensexview/Index_Contribution.aspx?index_code=16

9. NIFTY - It is an index like the sensex . The CNX Nifty/Nifty50 or simply NIFTY is a well diversified 50 stock index accounting for 23 sectors of the economy.

CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL).  IISL is India's first specialised company focused upon the index as a core product.

To check its composition , visit : http://www.nseindia.com/products/content/equities/indices/cnx_nifty.htm