Infostock Equity Report, No. 26011501

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10 Terms used in Stock Market

1️⃣ What is BETA in Stock Market Terms?

Beta = Sensitivity of a stock to market movement

Simple Definition
If the market moves 10% and the stock moves 15% → Beta > 1
If the stock moves only 5% → Beta < 1

Formula (Simple)
Beta = Stock Volatility ÷ Market Volatility

Important Truth
High beta gives faster gains — and faster losses.

2️⃣ What is MARKET CAPITALIZATION?

Market Cap = Company’s market value

Simple Definition
Market Cap = Share Price × Total Shares

Example
₹100 share × 10 crore shares = ₹1,000 crore market cap

Important Truth
Big companies move slower, small companies move faster.

3️⃣ What is P/E RATIO?

P/E = Price paid for ₹1 of earnings

Simple Definition
If P/E = 20 → You pay ₹20 for ₹1 profit

Formula
P/E = Share Price ÷ EPS

Important Truth
High P/E means growth expectations, not guaranteed returns.

4️⃣ What is EPS (Earnings Per Share)?

EPS = Profit per share

Simple Definition
Company earns ₹100 crore
Shares = 10 crore
EPS = ₹10

Important Truth
Rising EPS matters more than rising stock price.

5️⃣ What is DIVIDEND?

Dividend = Profit shared with shareholders

Simple Definition
If dividend = ₹5
You get ₹5 per share you own

Important Truth
Good dividends signal stable businesses, not fast growth.

6️⃣ What is COMPOUNDING?

Compounding = Earnings on earnings

Simple Definition
₹1,00,000 at 12% for 20 years ≈ ₹9,64,000

Important Truth
Time matters more than timing.

7️⃣ What is STOP LOSS?

Stop Loss = Pre-decided exit to limit loss

Simple Definition
Buy at ₹100
Stop loss at ₹90
Max loss = 10%

Important Truth
Capital protection comes before profit.

8️⃣ What is VOLUME?

Volume = Number of shares traded

Simple Definition
High price move + high volume = strong move

Important Truth
Price without volume is unreliable.

9️⃣ What is RISK–REWARD RATIO?

Risk–Reward = Loss vs Gain potential

Simple Definition
Risk ₹10 to earn ₹30 → Ratio = 1:3

Important Truth
Even 40% accuracy works with good risk–reward.

🔟 What is MARKET CYCLE?

Market moves in cycles, not straight lines

Simple Definition
Fear → Recovery → Greed → Crash → Repeat

Important Truth
Money is transferred from impatient to patient investors.

What Daily Price Movements Reveal About Stock Trends

Daily price changes reflect market psychology, momentum, and potential trend direction. While one day alone is never decisive, the size of the move often reveals the strength behind a trend.

✓ When a Stock Rises

1%–5% | Mild Momentum
Normal buying activity, gradual accumulation, steady confidence.
Trend: Neutral to mildly bullish if volume is stable.

6%–10% | Strong Demand
Often driven by positive news, breakouts, or institutional interest.
Trend: Bullish, especially with high volume.

11%–15% | Accelerated Move
Earnings surprises, contracts, approvals, or short covering.
Trend: Strongly bullish, but volatility increases.

16%–20% | Extreme Surge
Transformational news, heavy speculation, or FOMO-driven buying.
Trend: Short-term bullish, high risk of pullback.

✓ When a Stock Falls

1%–5% | Normal Correction
Profit booking, mild negativity, or broader market weakness.
Trend: Neutral; healthy in an uptrend if volume is low.

6%–10% | Selling Pressure
Bad news, support breakdown, or institutional selling.
Trend: Short-term bearish.

11%–15% | Sharp Decline
Earnings miss, regulatory issues, or macro shocks.
Trend: Strongly bearish; recovery needs a clear catalyst.

16%–20% | Capitulation Zone
Extreme fear, forced selling, or severe fundamentals.
Trend: Very bearish short term; possible technical rebound for high-risk investors.

✓ Key Takeaways

1–5%: Normal noise

6–10%: Trend confirmation

11–20%: Emotion-driven, high volatility
Always analyze volume, news, trend structure, and market conditions alongside price.

✓ Final Note:
Price movements are signals, not decisions. Context—not percentages alone—drives successful investing.

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