Indian Markets Glossary

Alternative Investment Fund(AIF)

Alternative Investment Funds are privately pooled investment vehicles in India that collect capital from sophisticated investors to invest in assets beyond traditional stocks and bonds. They are regulated by SEBI under the AIF Regulations, 2012, with a minimum investment of one crore rupees per investor, and are classified into Category I, II, and III based on strategy and use of leverage.

Source: https://www.sebi.gov.in/

Asset Management Company(AMC)

An Asset Management Company is a SEBI-registered firm that launches and manages mutual fund schemes on behalf of unit-holders. AMCs appoint professional fund managers, publish daily NAVs, and operate under the SEBI Mutual Fund Regulations alongside the Association of Mutual Funds in India (AMFI) as the industry body.

Source: https://www.amfiindia.com/

Assets Under Management(AUM)

Assets Under Management is the total market value of investments that an Asset Management Company, PMS provider, or AIF manages on behalf of its clients. AUM is reported periodically and is a common scale indicator for mutual funds and portfolio managers in India.

Source: https://www.amfiindia.com/

Bank Nifty

Bank Nifty is the NSE's benchmark index of the most liquid and large-capitalised Indian banking stocks. It is widely tracked by traders and is the underlying for some of the most actively traded index futures and options on the NSE, with weekly expiry contracts available.

Source: https://www.nseindia.com/

Beneficial Owner ID(BO ID)

The Beneficial Owner ID is the unique identifier assigned to an investor's Demat account by the depository (NSDL or CDSL). It combines with the DP ID to form the 16-digit Demat account number used for all securities credits, debits, and corporate-action processing.

Source: https://nsdl.co.in/

Bonus issue

A bonus issue is the issuance of additional shares to existing shareholders, free of cost, in a fixed ratio to their current holdings. Bonus shares are credited automatically to the shareholder's Demat account and are typically funded out of the company's free reserves.

Bombay Stock Exchange(BSE)

The Bombay Stock Exchange is one of India's two principal stock exchanges, headquartered in Mumbai. The BSE lists Indian equities, bonds, and derivatives, runs the Sensex benchmark index, and operates trading hours from 9:15 AM to 3:30 PM on business days under SEBI regulation.

Source: https://www.bseindia.com/

Buyback

A buyback is a corporate action in which a listed company repurchases its own shares from existing shareholders, either through a tender offer or via the open market. Buybacks reduce the number of outstanding shares and are governed by SEBI's buyback regulations.

Source: https://www.sebi.gov.in/

Central Depository Services Limited(CDSL)

CDSL is one of the two central depositories in India that hold investor securities in dematerialised form. Investors access CDSL accounts indirectly through a Depository Participant such as a bank or brokerage firm, which is registered with CDSL to open and operate Demat accounts.

Source: https://www.cdslindia.com/

Dematerialised Account(Demat)

A Demat account is a SEBI-regulated electronic repository that holds shares, bonds, mutual funds, ETFs, and government securities in dematerialised form. It is maintained by one of two central depositories — NSDL or CDSL — through a Depository Participant, and has been mandatory for stock-market trading in India since 1996.

Source: https://www.sebi.gov.in/

Domestic Institutional Investor(DII)

Domestic Institutional Investors are India-domiciled institutions — mutual funds, insurance companies, banks, and pension funds — that invest in Indian capital markets. DII flows are reported daily by the NSE and BSE alongside FPI flows and are a key indicator of domestic market sentiment.

Source: https://www.nseindia.com/

Delivery Instruction Slip(DIS)

A Delivery Instruction Slip is the physical or electronic instruction an investor gives to their Depository Participant to debit securities from their Demat account — for example, when transferring shares between accounts or off-market transfers. Most DPs now offer e-DIS through online portals.

Source: https://nsdl.co.in/

Dividend

A dividend is a distribution of a portion of a listed company's profits to its shareholders, typically paid in cash. In India, dividends are credited directly to the bank account linked to the shareholder's Demat account on the record date, and are taxable in the hands of the recipient.

Depository Participant ID(DP ID)

The Depository Participant ID is the unique 8-digit code assigned by NSDL or CDSL to each Depository Participant — typically a bank or brokerage firm. Combined with the investor's BO ID, it forms the 16-digit Demat account number used for all securities transactions.

Source: https://nsdl.co.in/

Demat Request Form(DRF)

A Demat Request Form is the document an investor submits to their Depository Participant to convert physical share certificates into electronic (dematerialised) form. Since 2019, SEBI has required listed-company shares to be held in dematerialised form for transfer, making the DRF an entry-point document for legacy physical holdings.

Source: https://www.sebi.gov.in/

Equity Linked Savings Scheme(ELSS)

ELSS is a category of equity mutual fund that offers tax benefits under Section 80C of the Income Tax Act, making it one of the few equity-oriented instruments eligible for the 80C deduction. ELSS schemes invest primarily in equities and carry a statutory lock-in period.

Source: https://www.amfiindia.com/

Exchange Traded Fund(ETF)

An Exchange Traded Fund is a mutual-fund-style basket of securities — typically tracking an index such as Nifty 50 or Sensex — whose units are listed and traded on stock exchanges like the NSE and BSE. ETFs combine the diversification of a mutual fund with the intraday tradability of a stock, and are held in the investor's Demat account.

Source: https://www.amfiindia.com/

Foreign Institutional Investor(FII)

Foreign Institutional Investor was the earlier regulatory category for non-resident institutions investing in Indian securities. Since the SEBI FPI Regulations of 2014 (revised 2019), FIIs have been subsumed under the broader Foreign Portfolio Investor (FPI) category, and the term FII is now largely historical.

Source: https://www.sebi.gov.in/

Foreign Portfolio Investor(FPI)

Foreign Portfolio Investment refers to investments made by non-resident individuals, institutions, or funds in Indian financial assets such as listed stocks, bonds, and mutual funds. SEBI regulates FPIs under the FPI Regulations, 2019, which require registration via a Designated Depository Participant and compliance with KYC, periodic reporting, and per-company investment limits.

Source: https://www.sebi.gov.in/

Follow-on Public Offer(FPO)

A Follow-on Public Offer is the issuance of additional shares to the public by a company that is already listed on the stock exchange. Like an IPO, an FPO is regulated by SEBI and requires an offer document; it is used by listed companies to raise additional capital from public markets.

Source: https://www.sebi.gov.in/

Index Fund

An Index Fund is a passively managed mutual fund or ETF that aims to replicate the performance of a market index such as Nifty 50, Sensex, or a sectoral index. Index funds typically charge lower expense ratios than actively managed schemes and are SEBI-regulated under the Mutual Fund Regulations.

Infrastructure Investment Trust(InvIT)

An Infrastructure Investment Trust is a SEBI-regulated trust that pools investor capital to own and operate revenue-generating infrastructure assets such as roads, transmission lines, or pipelines. InvITs are listed on Indian exchanges, governed by the SEBI InvIT Regulations, 2014, and distribute the bulk of their cash flows to unit-holders.

Source: https://www.sebi.gov.in/

Initial Public Offering(IPO)

An Initial Public Offering is the process by which a private company first sells shares to the public to raise capital and list on Indian exchanges such as the NSE and BSE. IPOs are regulated by SEBI, which requires issuers to file a Draft Red Herring Prospectus detailing financials, risks, and use of proceeds.

Source: https://www.sebi.gov.in/

Know Your Customer(KYC)

Know Your Customer is the mandatory identity-verification process every investor must complete before opening a trading or Demat account in India. SEBI requires KYC to include PAN and Aadhaar verification, address proof, and a photograph, and most brokers now offer fully digital e-KYC.

Source: https://www.sebi.gov.in/

Largecap

Largecap refers to the top 100 listed companies in India ranked by full market capitalisation, as defined by SEBI's mutual-fund category framework. Largecap mutual funds invest predominantly in this universe and are typically considered the least volatile of the equity-cap categories.

Source: https://www.sebi.gov.in/

Long Term Capital Gains(LTCG)

Long Term Capital Gains are profits earned on the sale of a capital asset held beyond the applicable holding period under Indian income-tax law. The holding-period threshold and applicable tax rate depend on the asset class (listed equity, debt fund, real estate, etc.); investors should consult the Income Tax Act and current Finance Act provisions for the rates that apply to them.

Source: https://www.incometax.gov.in/

Margin Trading Facility (MTF)

Margin Trading Facility is a SEBI-regulated leverage product offered by brokers that allows investors to buy listed shares by paying only a fraction of the trade value upfront, with the broker funding the balance. MTF positions are subject to SEBI's margin and pledge rules and the broker's risk-management framework.

Source: https://www.sebi.gov.in/

Midcap

Midcap refers to listed companies ranked 101 to 250 by full market capitalisation under SEBI's mutual-fund category framework. Midcap mutual funds invest predominantly in this universe, which typically carries higher growth potential and higher volatility than largecaps.

Source: https://www.sebi.gov.in/

Mutual Fund(MF)

A mutual fund is a pooled investment vehicle that collects money from multiple investors to invest in a diversified portfolio of stocks, bonds, money-market instruments, or other securities. Each scheme is run by a professional fund manager appointed by a SEBI-registered Asset Management Company, with AMFI acting as the industry body.

Source: https://www.amfiindia.com/

Net Asset Value(NAV)

Net Asset Value is the per-unit market value of a mutual fund scheme, calculated by dividing the scheme's total assets (less liabilities) by the number of outstanding units. NAVs are published daily by Asset Management Companies and are the price at which investors subscribe to and redeem mutual fund units.

Source: https://www.amfiindia.com/

Nifty 50

Nifty 50 is the NSE's flagship benchmark index of 50 large-capitalised Indian companies across major sectors. It is widely tracked by index funds, ETFs, and derivatives, with Nifty 50 futures and options among the most actively traded contracts on the NSE.

Source: https://www.nseindia.com/

National Securities Depository Limited(NSDL)

NSDL is one of the two central depositories in India that hold investor securities in dematerialised form. Investors do not interact with NSDL directly; instead, they open and operate their Demat account through a Depository Participant — typically a bank or brokerage firm — registered with NSDL.

Source: https://nsdl.co.in/

National Stock Exchange(NSE)

The National Stock Exchange is India's largest stock exchange by trading volume, headquartered in Mumbai. The NSE lists equities, derivatives, ETFs, and debt instruments, runs the Nifty 50 benchmark index, and operates from 9:15 AM to 3:30 PM on business days under SEBI regulation.

Source: https://www.nseindia.com/

Offer For Sale(OFS)

An Offer For Sale is a SEBI-regulated mechanism by which promoters or large shareholders of a listed company sell part of their holdings to the public through the stock exchange. Unlike an IPO or FPO, an OFS does not raise fresh capital for the company — the proceeds go to the selling shareholders.

Source: https://www.sebi.gov.in/

Permanent Account Number(PAN)

PAN is the 10-character alphanumeric identifier issued by the Indian Income Tax Department to every taxpayer. PAN is mandatory for opening trading, Demat, and bank accounts, and is the primary KYC document SEBI requires for participation in Indian securities markets.

Source: https://www.incometax.gov.in/

Peak Margin

Peak Margin is the SEBI margin-collection regime, implemented in phases from December 2020 and fully effective by September 2021, that requires brokers to collect margins from clients upfront and report the highest margin requirement during the day. The rule reduces intraday over-leveraging in cash and derivatives segments.

Source: https://www.sebi.gov.in/

Pledge

A pledge is the marking of Demat-held securities as collateral with a Depository Participant — typically to avail margin for trading or to take a loan against shares. Since September 2020, SEBI has required margin pledges to be created using a depository-level pledge mechanism rather than transfer of securities to the broker's account.

Source: https://www.sebi.gov.in/

Portfolio Management Services(PMS)

Portfolio Management Services are SEBI-regulated investment products in which a SEBI-registered Portfolio Manager builds and manages a bespoke portfolio for an individual investor, with securities held directly in the investor's own Demat account. SEBI sets a minimum investment of fifty lakh rupees and prescribes fee, reporting, and conduct rules under the PMS Regulations, 2020.

Source: https://www.sebi.gov.in/

Reserve Bank of India(RBI)

The Reserve Bank of India is India's central bank and monetary authority. The RBI sets policy rates, issues currency, regulates banks and non-banking financial companies, oversees the government-securities market, and prescribes investment limits for foreign portfolio investors alongside SEBI.

Source: https://www.rbi.org.in/

Real Estate Investment Trust(REIT)

A Real Estate Investment Trust is a SEBI-regulated trust that pools investor capital to own and operate income-generating real-estate assets — typically commercial offices and retail properties. REITs are listed on Indian exchanges, governed by the SEBI REIT Regulations, 2014, and distribute the bulk of their cash flows to unit-holders.

Source: https://www.sebi.gov.in/

Rights issue

A rights issue is the offering of additional shares by a listed company to its existing shareholders, in a fixed ratio to current holdings and typically at a discount to market price. Rights issues are SEBI-regulated and let shareholders maintain their proportional ownership while the company raises additional capital.

Source: https://www.sebi.gov.in/

Securities and Exchange Board of India(SEBI)

The Securities and Exchange Board of India is the statutory regulator for India's securities markets. SEBI registers and supervises brokers, mutual funds, AIFs, PMS providers, depositories, and listed companies; it sets KYC, disclosure, and conduct rules, and enforces the SEBI Act, 1992 and underlying regulations.

Source: https://www.sebi.gov.in/

Sectoral Index

A Sectoral Index is a stock-market index composed of listed companies from a single industry sector — such as Nifty Bank, Nifty IT, Nifty Pharma, or Nifty Auto. Sectoral indices are published by the NSE and BSE and are used as benchmarks for sector-focused mutual funds, ETFs, and derivatives.

Source: https://www.nseindia.com/

Sensex

Sensex is the BSE's flagship benchmark index, composed of 30 large-capitalised Indian companies across major sectors. It is one of the two principal headline indicators of Indian equity-market performance, alongside the NSE's Nifty 50.

Source: https://www.bseindia.com/

Systematic Investment Plan(SIP)

A Systematic Investment Plan lets an investor commit a fixed amount to a mutual fund scheme at a regular frequency — typically monthly or quarterly — benefiting from rupee-cost averaging and compounding. SIPs in India can be started with as little as Rs 500 per month and are the most common entry point into mutual-fund investing.

Source: https://www.amfiindia.com/

Smallcap

Smallcap refers to listed companies ranked 251 and below by full market capitalisation under SEBI's mutual-fund category framework. Smallcap mutual funds invest predominantly in this universe, which typically carries the highest growth potential and the highest volatility of the equity-cap categories.

Source: https://www.sebi.gov.in/

Short Term Capital Gains(STCG)

Short Term Capital Gains are profits earned on the sale of a capital asset held within the applicable short-term holding period under Indian income-tax law. The holding-period threshold and applicable tax rate depend on the asset class (listed equity, debt fund, real estate, etc.); investors should consult the Income Tax Act and current Finance Act provisions for the rates that apply to them.

Source: https://www.incometax.gov.in/

Stock Split

A stock split is a corporate action in which a company divides each existing share into multiple shares of smaller face value, increasing the number of outstanding shares while leaving total market capitalisation unchanged. Split shares are credited automatically to the shareholder's Demat account.

Securities Transaction Tax(STT)

Securities Transaction Tax is a direct tax levied by the Government of India on the value of securities transacted on recognised Indian stock exchanges. STT applies to equity delivery and intraday trades, equity-mutual-fund redemptions, and futures and options; the rate depends on the segment and is updated through the annual Finance Act.

Source: https://www.incometax.gov.in/

T+1 settlement

T+1 is the trade-settlement cycle in which securities and funds are exchanged one business day after the trade date. Indian equity markets moved to T+1 in phases between 2022 and 2023, and all NSE/BSE cash-segment trades now settle on a T+1 basis through the clearing corporation.

Source: https://www.sebi.gov.in/