Before you dive into stock research, it’s important to understand the language of the market. Whether you’re just exploring how companies are performing or comparing financials across websites like Screener, Tickertape, or Moneycontrol — knowing the basic terms can make your research sharper and more meaningful.
Here are 10 essential stock market terms every researcher (not just investors) should know:
📌 1. Market Capitalization (Market Cap)
What it means: The total value of a company’s shares.
Formula: Share Price × Number of Outstanding Shares
Why it matters: It tells you whether a company is large-cap, mid-cap, or small-cap — which often relates to stability, risk, and growth potential.
📌 2. P/E Ratio (Price-to-Earnings Ratio)
What it means: How much investors are willing to pay for ₹1 of earnings.
Formula: Share Price ÷ Earnings Per Share (EPS)
Why it matters: Helps assess if a stock is overvalued or undervalued compared to its peers or its own history.
📌 3. EPS (Earnings Per Share)
What it means: The portion of a company’s profit assigned to each share.
Formula: Net Profit ÷ Total Number of Shares
Why it matters: A higher EPS usually indicates better profitability.
📌 4. ROE (Return on Equity)
What it means: How efficiently a company uses shareholder funds to generate profit.
Formula: Net Income ÷ Shareholder’s Equity
Why it matters: High ROE = efficient company. Useful for comparing companies in the same industry.
📌 5. Dividend Yield
What it means: The return a shareholder earns through dividends.
Formula: Annual Dividend ÷ Share Price
Why it matters: Shows how much income you might earn in addition to stock price gains.
📌 6. CAGR (Compound Annual Growth Rate)
What it means: The consistent growth rate of a company or investment over a period.
Why it matters: Helps understand long-term performance, especially of revenue or profit.
📌 7. Debt-to-Equity Ratio (D/E Ratio)
What it means: A company’s financial leverage.
Formula: Total Liabilities ÷ Shareholder’s Equity
Why it matters: Shows how much the company depends on borrowed funds. High debt can be risky.
📌 8. Volume
What it means: The number of shares traded during a time period.
Why it matters: High volume = high interest and liquidity. Useful for tracking stock activity.
📌 9. 52-Week High/Low
What it means: The highest and lowest stock price in the past 52 weeks.
Why it matters: Helps gauge the stock’s trading range and market sentiment.
📌 10. Beta
What it means: The volatility of a stock in comparison to the overall market.
Why it matters: A beta >1 means higher volatility; <1 means more stability. Useful for understanding risk profile.
✅ Final Thoughts
Understanding these terms won’t make you a stock market expert overnight — but they lay the foundation for effective research. Next time you use tools like Screener or Moneycontrol, you’ll interpret the data with more clarity and confidence.
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