IMPORTANT TERMS OF STOCK MARKET - 2

   We have discussed some essential terminologies of the Stock Market in the Previous blog. Here is the new blog that discusses some other important terms. So let's begin.

1. Hedge - 

 Have you ever heard about Hedging? When we protect ourselves from a loss, we call that position a Hedge Position. 

     For Example - Person A always trades in the Equity Market, and one day the stock market crashes so he does not leave with any profits because he only invested in Equity. Now Person B invests in Equity Market as well as in Gold. So here this person has Hedged the position as when the stock market falls there are chances for a price rise of Gold. So here Person B has Hedged the position.

2. Convertible Securities - 

 The securities that can be converted in different forms are called Convertible Securities. There are several bonds payable in shares if the organization cannot pay in cash.

3. Blue Chip Stocks

  Blue Chip can be called an authentic and trustworthy stock that we can keep on. These stocks are players who exist for very very long time and the dividend record is having a good history. Some blue-chip stocks in NSE are HDFC Bank, Reliance, Infosys, TCS, etc.

4. Board LOT -

  When we buy a group of shares in a specific company then that group is called a LOT. The benefit of buying shares in a lot is that the price is reduced as compared with the price per share. 

Reliance - 1 
Source - GROWW

Reliance - 2 
Source - GROWW

For E.g. as shown in picture 1, the price of a lot of 250 shares of Reliance is 53.30 per share which means the total amount will be Rs. 13,325/-. In picture 2 price of a single share of Reliance is Rs. 2592.75/-. If we calculate the amount with 250 shares at this price then the total purchasing amount will be Rs. 6,48,187.5/-! Huge difference right.

5. Defensive Stock -

  A defensive stock is a stock that provides you continuous earnings in the form of dividends no matter how the market performs. Therefore these stocks are called as defensive stocks.  Investors purchases these stocks to get regular incomes. Dividends are not monthly payments it depends on the profitability of the company. Here are some good defensive stocks HUDCO, ITC, Standard Industries etc.

Note - All the companies, and stocks that are shown in the blog are not any buying recommendations these stocks are used for explanation purposes only. If you want to invest in any of these stocks please do your own research.

If you want to start investing then you can use these two apps - GROWW APP and Angel Broking

So here are some more important terminologies to understand the stock market. I hope you liked it, do comment if you knew any of these terminologies. Thank you.