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If the futures price is trading higher than the spot, then the futures market is said to be at a premium. On the other hand, a discount is when the spot price exceeds the futures price. While in normal conditions the futures trade at a premium. However, at times, due to demand-supply mismatch futures would trade at a discount. Click  here  to understand the basics of futures trading.        Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more ...  

A forex gain or loss typically happens when a company buys or sells in foreign currency. As the foreign currency fluctuates in comparison to the domestic currency, the value of the goods or services changes. For instance, if the Indian rupee strengthens in comparison to the US dollar after an exporter has made a deal, he would stand to make a forex loss. And if the rupee weakens then it means the exporter would make a forex gain. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more...

A limit order provides an option to an investor or trader to buy and sell stocks at a particular price. For instance, assume that you don’t want to pay more than ₹92 for a stock. Then you can place a buy limit order of ₹92, which means that your order will be executed if the stock price falls at or below that level. Similarly, if you want to sell a stock at ₹100, you can place a sell limit order of ₹100. However, there is also a possibility that your limit order won’t get fulfilled, if the stock doesn’t reach the desired level. Courtsey :  Upstox (start Karke Dekho) For more about Upstox -  Read more....

Targeted Long-Term Repo Operations (TLTRO) refers to a central bank’s attempt to spur economic growth by infusing liquidity. Under TLTRO, a central bank offers money to banks at the repo rate for a fixed period and takes government securities as collateral. Banks can use this money to invest in specific sectors through debt instruments. This encourages banks to lend more as they receive money at a cheaper rate and for a longer duration. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Intraday trading refers to the style of short-term trading where the trader buys or sells a stock and then squares off the position on the same day before the market closes. For instance, a trader may buy a stock at ₹100 at 10:00am and then sell it off at ₹103 by 10:30am. The objective of intraday trading is not to invest for the long term but to trade for quick gains. The biggest advantage that traders see in intraday trading is that it does not block the capital after the market closes for the day. Further, not taking positions overnight also helps in eliminating risks of unfavourable opening on the next day. Meanwhile, one of the disadvantages of intraday trading is that it gives very little time (only a day) for the position to become profitable. Courtsey :  Upstox (start Karke Dekho) For more about Upstox -  Read more....

Street estimate refers to the average of analysts' forecasts regarding a company’s revenue, profit or any other metric. These estimates are specifically used for a company’s financial results. A comparison between actual results and estimates helps traders and investors to see whether a company has outperformed or underperformed against market expectations. An outperformance is generally handsomely rewarded with an increase in share price. Similarly, shares of a company fall when it fails to meet the street’s expectations. Courtsey :  Upstox (start Karke Dekho) For more about Upstox -  Read more....

A moving average is a technical indicator that helps to identify a trend in the price of a stock. Traders also use moving averages to determine support and resistance levels. Thus, by studying moving averages, traders can spot buying and selling opportunities. Some of the widely used moving averages are 5-day and 20-day for short term trading and 50-day and 200-day for long term investment. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Net interest margin (NIM) is a ratio used to measure the profitability of a bank or lender. It is calculated by dividing the net interest income (difference between the interest earned and interest paid) by the average interest-earning assets including loans and bonds. For banks and financial institutions, it’s important to have a positive net interest margin. It reflects how effectively they are using the money they have borrowed in the form of deposits or any other debt instrument. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Adjusted Gross Revenue (AGR) dues refers to fees or a part of revenue, which all telecom operators must pay to the Indian government for using spectrum, which is publicly-owned. In 1999, the government replaced the fixed license fee model with the revenue-sharing agreement. However, there has been a dispute between telcos and the government over the definition of AGR, which is used to calculate the dues. While the government claims that it encompasses telecom as well as non-telecom revenue, the industry players claim that the AGR should only consist of revenue from the core telecom business. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

The resistance level refers to a price point from which a stock struggles to move upward. This is a price point where there could be more sellers than buyers, and hence there is resistance to move upward. For traders, the resistance level can serve either as an entry or exit point. If a stock breaches resistance level, it means there is a buying opportunity. And if it struggles at the resistance level, traders can choose to book their profits. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

A draft red herring prospectus (DRHP) or simply an offer document is the preliminary document which a company submits to the market regulator SEBI before listing on the stock markets. The document includes important disclosures about the IPO-bound company such as its business and industry overview, financial statements, growth prospects, risks and even promoters’ background. Further, the document also states the purpose of raising the money. The DRHP has the most authentic and detailed information about the company and hence investors should carefully study it before subscribing to an IPO. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Founded in 1960, the Organisation of Petroleum Exporting Countries (OPEC) is made up of 13 oil-exporting nations. These countries produce about 40% of the world’s crude oil and account for around 60% of the total petroleum traded globally. Because of this, their decision to increase or reduce oil supply can significantly impact oil prices. Since 2010, some non-OPEC oil-producing countries (called OPEC allies) such as Russia have also attended the OPEC meeting to decide oil output. Together, the group is referred to as OPEC+. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Capital expenditure or capex refers to investment a company makes to acquire or maintain fixed assets, such a plant, machinery or buildings. If a company thinks that the demand for its products or services is increasing, it may invest in upgrading or increasing capacities if its existing capacity may fall short. A company’s capital expenditure is shown on the assets side of the balance sheet. This is because capex is used to create assets for the business rather than as an expense. Courtsey :  Upstox (start Karke Dekho) For more about Upstox -  Read more....

When an owner or promoter of a company takes a loan against his own shares as collateral, it is called promoter pledging. A promoter may pledge his shares for personal financial needs or to fund new investments. While pledging of shares is a common practice, the problem arises when the stock price falls and the bank asks the promoter to pledge more shares or repay a certain portion of the loan. If the promoter is unable to cover the shortfall, the bank may sell the shares, leading to a further fall in the stock price. This may trigger selling from other investors as well, which can turn into a vicious cycle, especially if the company is fundamentally weak. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Results based on a constant-currency basis strip off the effect of currency fluctuations and give investors the true picture of the company’s growth. This is because the change in currency prices (appreciation and depreciation) can impact financial numbers of export-oriented companies such as those in the IT and pharma sectors. For instance, rupee depreciation would mean these companies are getting more rupees for each dollar they earn. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

The cut-off price of an initial public offering (IPO) refers to the price at which the shares are issued to investors. In an IPO, shares are usually offered within a price band. As an investor, one can bid for shares at any price within the price band or simply select the cut-off price option. Instead of bidding, at a specific price, if you apply at the cut-off price, then you are expressing willingness to pay whichever price that shares are issued at. This increases the chances of getting an IPO allotment. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

A reserve merger refers to a private company taking over a publicly-traded company or when an entity buys out its parent company. In the first case, it is one of the ways for a private company to go public. And in the second case, the reserve merger is done to create a larger company. For instance, in 2002, parent company ICICI  merged  with ICICI Bank to create a large bank that can cater to multiple segments. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

A bearish trend refers to a downward movement in the prices of stocks or indices. A bearish trend grips the market when traders think that prices will fall due to adverse developments. Thus, it reflects pessimism in traders' sentiments. A market that is witnessing a continuous decline or fall of more than 20%, is called a bear market. Predicting the bearish trend is important from the perspective of profit booking and avoiding losses. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....

Unit economics is a tool to measure a company’s revenue or cost per unit of its product or service. For example, a multiplex chain or an airline would calculate its revenue per seat. Similarly, a telecom operator tracks average revenue per user (ARPU). Understanding a business in this manner helps to forecast profits as the number of customers increases and to alter product specification to cut costs. Unit economics can be used to calculate how much money a business is making per unit after deducting the expenses. For instance, the IPO-bound food-delivery firm Zomato recently reported that it is making ₹22.9 per order after subtracting the delivery cost, discounts to its customers and other variable costs. Courtsey :  Upstox (start Karke Dekho) For more about Upstox -  Read more....

Sectoral rotation refers to the movement of money from one industrial sector to another based on sectoral and macroeconomic factors. For instance, during an economic boom, investors may prefer to invest in sectors such as banking and metals, which tend to outperform the overall markets. Similarly, in a downturn, banks are typically the worst affected, and investors may choose to move money out of banks to sectors such as FMCG or pharma, which have relatively stable demand. To benefit from sectoral rotation, investors need to develop a good understanding of economic and market cycles. Courtsey : Upstox (start Karke Dekho) For more about Upstox - Read more....