S&P 500 Index: US large-cap stock market index maintained by Standard & Poor’s. Its 500 constituents represent over 80% of US equities by market capitalization.
Safe Haven: Investment whose value is expected to remain relatively stable during periods of high market volatility. For example, during the credit crunch of 2008, there was a “flight to quality” when many investors viewed government bonds as a safe haven from the corporate debt of questionable credit quality and for which there was perceived to be a high risk of default.
Sale and Leaseback: Sale of an asset to a financial institution that then leases it back to the seller. It is used by companies to raise capital and may provide tax benefits.
Saucer: A term used in technical analysis to indicate a chart pattern showing that a share price has formed a saucer-like bottom and is moving up, signaling further rise. If the pattern is that of an upside-down saucer, the signal is for a further fall.
Samurai Bonds: Foreign bonds offered in the Japanese Bond Market.
Saturday Night Special (U.S.): A surprise tender offer with a 7-10 day expiration period. So-called because the strategy often involves announcing it over the weekend, thus denying the rival management time to respond.
Sauda Book: Members and authorized assistants are given a book called “Sauda Book” to record transactions of sales and purchases.
Scam: Scam is a US word meaning fraud, swindle, and cheating.
Scam 1992 The Harshad Mehta Story: The story of the “Scam”, set in the 1980s and 90’s Bombay. Scam 1992 follows the life of the Harshad Mehta – the infamous “Bachchan of BSE”. It was a rags-to-riches story till financial journalist Sucheta Dalal exposed Harshad as the man behind India’s biggest financial scam. After his arrest, the stock market crashed and countless Indians lost all their savings. For the first time, the CBI was compelled to launch an investigation into a financial crime. A corrupt financial system was revealed Harshad eventually died in custody.
Scenario Analysis: Quantitative analysis of the financial impact on an investor’s assets and liabilities of a defined set of economic and financial conditions, usually projected over the medium term.
Screening: Examination of various securities, usually through computer models, to identify certain predetermined factors such as valuations, earnings, liquidity, etc., with a view to the exclusion of those securities not meeting the criteria from an investment portfolio.
Screen Based Trading: Form of trading that uses modern telecommunication and computer technology to combine information transmission with trading in financial markets,
Sector Fund: A fund that invests primarily in securities of companies engaged in a specific investment segment. Sector funds entail more risk but may offer greater potential returns than funds that diversify their portfolios.
Secondary Market: The market for previously issued securities or financial instruments.
Scrip Dividend: Payment of dividends in the form of additional shares rather than cash.
SEC (Securities and Exchange Commission) (U.S) Regulatory authority for the US securities industry. It has civil enforcement powers only and must seek criminal prosecution through the US Justice Department.
Secondary Market: Stock exchanges and over-the-counter markets where shares are traded after they have been issued, which was done in the primary market.
Secondary Trend: Market movement in the opposite direction of the primary trend. It is a temporary interruption in a bull or bear market.
Security: (a) Term for fixed interest stocks or ordinary shares or, in general terms, for any tradable financial instrument giving title to property or claims on income payments. (b) Assets or collateral pledged to support debt obligations.
Securities Lending: Process where one investor lends stock to another investor. The borrowing investor has to issue collateral to the stock lender and usually borrows stock to engage in “short selling” aiming to profit from falling stock prices. The lending investor usually lends the stock to gain a return in the form of interest received from the borrower. Passive fund managers may engage in stock lending and use the earned interest to help regulate their fund returns so that they are more in line with benchmark returns.
Securitisation: Process of creating a tradable financial instrument by combining other non-tradable, usually loan-based assets and marketing them to investors.
Selling Climax: A sharp price decline accompanied by extremely high volume. The decline is caused by panic-stricken investors who are dumping securities. A selling climax often takes place at the end of a bear market and typically presents a good time to buy.
Selling Short: Sale of shares, which he does not possess, by a speculator. He usually borrows the shares from his stockbroker promising to replace them at a future date, hoping that the price will fall by then. If the price falls, he buys the shares at the lower rate and makes a profit on the difference. If the price has risen, on the other hand, he has to buy the shares at the higher price and sustain a loss.
Self Clearing Member: A member of a clearing corporation or clearinghouse of the derivatives exchange or derivatives segment of a stock exchange who may clear and settle transactions on its own account or on account of its clients only and shall not clear or settle transactions in securities for any other trading members.
Sensitivity Analysis: Analysis using mathematical tools of the extent to which small changes in a particular variable, such as the weighting in a certain security or market, may impact portfolio return or volatility.
Sensitive Index: A share price index based on 30 active scrips developed by the Bombay Stock Exchange with 1978- 79 as the base year, in short SENSEX.
Settlement: Payment or collection of proceeds after trading security. Settlement usually takes place sometime after the deal and price are agreed upon.
Sensitive Market: The market is easily influenced by good or bad news.
Sentiment Indicators: Assessment of bullish and bearish sentiment of the investors. Many technical Analyses would look upon these as contrary indicators, that is if most of the investors are bullish, the market is about to fall and vice versa.
Shake out: A change in market conditions often results in the liquidation of marginally financed companies in an industry. When the market is glutted by too many companies trying to market the same class of goods or services and there are more sellers than buyers, there will be a shakeout and many companies will be eliminated. Speculators in the stock markets can be shaken out too, when stock market conditions force them to sell their positions, often at a big loss.
Share Blocking: Mechanism that prevents investors who wish to vote for their shares at annual meetings from trading for a defined period of time prior to the meetings.
Share Buyback: Company’s repurchase of its own shares. Typically increases the market price of the remaining shares because each remaining share now represents a larger claim on earnings and assets.
Shareholder Activism: Public or confrontational approach to shareholder engagement. In addition to shareholder engagement, pressure can be exerted on companies through strategic divestment or attempts to influence public opinion.
Sharia Investment: Investment in companies whose practices conform with Islamic law.
Sharpe Ratio: Statistical measure of reward per unit of risk. Developed by William F. Sharpe, it is calculated as the excess return over the risk-free return divided by the standard deviation of the excess returns.
Shift: Measure the degree to which a yield curve has moved upwards or downwards, across all maturities, without changing its overall curvature and slope.
Short Bias: Long/short fund with a net short position and therefore positive exposure to a decrease in the underlying market.
Short Covering: Buying of stocks by a seller to complete his previous commitments. The process of buying stock to close out a short sale.
Short Position: In futures, the short has sold the commodity or security for future delivery; in options, the short has sold the call or the put and is obligated to take a futures position if he or she is assigned for exercise.
Short Squeeze: A situation in which a lack of supply and an excess demand for a traded stock forces the price upward. If a stock price starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, say a stock rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.
Short Position: Situation in which an investor sells a stock that the investor does not own. The investor is expecting the stock value to fall, thereby making a profit when the position is closed at a lower price.
Short-Term Investment Fund: Alternative to a cash account that holds short-term, low-risk investments. Often used by investors holding large cash sums who have not decided where to invest these funds for the longer term.
Share Transfer: The shares purchased by an investor are transferred to the Demat Account of the investor. The shares will remain in the Demat Account in electronic form until the investor wishes to sell the same.
Smart Money: Money invested wisely and successfully by people with particular knowledge of industries and the economy.
Sin Stock: Stock of a company that provides goods or services that the investor has deemed unethical. Common examples include the stocks of companies that are involved in the production or provision of tobacco, alcohol, armaments, pornography, or gaming facilities.
Skewness: Describes asymmetry from the normal distribution in a set of statistical data. Skewness can come in the form of “negative skewness” or “positive skewness”, depending on whether data points are skewed to the left (negative skew) or to the right (positive skew) of the data average.
Snowballing: When the price of a share reaches a certain level it activates a number of stop orders, to buy or sell. This exerts further pressure on the rising or falling market, activating more stop orders, creating further rise and fall in a snowballing effect.
Soft Loan: Loan to individuals, companies, or countries at a low rate of interest for special reasons, such as self-employment, investment in socially useful priority sectors, or developing economies.
Sortino Ratio: Modification of the Sharpe ratio. Calculated as the difference between the actual return and the risk-free return, divided by the downside risk. Here, the downside risk is a measure of the deviation of historical returns falling below a specified target rate of return
Squaring up: Settling of accounts on Account days.
Spin off: When a company decides that a subsidiary needs to stand on its own, it might do a spin-off, distributing shares of the new entity to existing shareholders, or selling the new business to its managers or even its employees.
Split: Sub-division of a share of a large denomination into shares of smaller denominations. Also means sub-division of holdings.
Spoofing: Placing a limit order at a better price than the current market price for the purchase or sale of thinly traded scrips and then endeavoring to cancel the initial limit order in order to induce buy or sell.
Spread The difference between the bid and the offer price of a share on the floor of the stock exchange. The spread may be large or small depending upon the demand and supply of shares in the market. The more frequently a share is traded in the exchange, the less will be the spread.
Speculation: Investment in highly risky securities with the expectation of making a profit from price increases. In some instances, the speculator’s decisions are not based on sound investment principles.
Spot Price: Present market price of a commodity, currency, or investment instrument.
Stakeholder: Any individual or group who has an interest in a firm; in addition to shareholders and bondholders, including labor, consumers, suppliers, the local community, and so on.
Stagnation: In the stock market, a period of inactivity and a low volume of trading.
Stagflation: Period characterized by low economic growth and high unemployment, and accompanied by increasing inflation.
Standard & Poor’s (S&P): Independent rating agency which assesses the creditworthiness of companies and their debt. The highest rating awarded is AAA, and the lowest is D. Other well-known rating agencies are Moody’s and Fitch.
Standard Deviation of Return: Statistical measure of the historical variability of returns relative to their mean (or expected return). An indicator of the degree to which an asset’s or portfolio’s returns deviate over a specific period in absolute terms or relative to another asset or benchmark portfolio.
Start-up: Finance used to form a completely new company that aims to develop a new and unproven product or service.
Stochastic Modelling: Statistical technique used in asset/liability modeling to estimate the probability of certain events occurring. It does this by simulating many possible outcomes for the factors affecting the assets and liabilities of the investor. A large number of outcomes are generated in order to derive a mean expected outcome and a statistical distribution of outcomes.
Stock Broker: A professional person, agency, or company which buys or sells on behalf of investors for a fee. The broker is registered with a stock exchange and is answerable to it for ethical practice.
Stock Exchange: Any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating, or controlling the business of buying, selling, or dealing in securities.
Stock Indices: This measures the value of a selected group of shares which indicates the way a stock market is moving. Indices may comprise a small number of important shares or they may be broad-based.
Stop Loss: A client’s order to his broker to sell a share if its market price falls to a certain level below the current price. It is a means of protecting one’s profit or reducing one’s loss while waiting for the market to recover.
Stock Option: The right to purchase shares of common stock in accordance with an agreement, upon payment of a specified amount; a compensation scheme under which executives are granted options to purchase common stock over an extended option period at a stated price.
Stock Splits: A distribution of company’s own capital stock to existing stockholders with the purpose of reducing the market price of the stock, which would hopefully increase the demand for the shares
Straddle: A strategy used in option or futures trading, consisting of an equal number of put and call options at the same exercise price with the same maturity date. Each option can be traded or exercised separately.
Strangle: Purchase or sale of call and put options with the same expiry date but with different strike prices.
Strategic Asset Allocation: Benchmark allocation between the main asset classes with the aim of meeting the investor’s risk and return objectives. Also known as an investment strategy or strategic allocation and sometimes prefixed with “long-term”.
Strike Price: The price at which the holder of a call (put) option has the right to buy (sell) the underlying security.
Structured Investment Vehicle (SIV): Pooled investment vehicle which attempts to profit by exploiting differentials in short- and long-term interest rates. SIVs are often set up by banks as independent units which do not impact directly on the bank’s balance sheet. In the stock market crash of 2008, SIVs became unpopular when it was revealed that they had been heavily invested in non-transparent asset-backed securities.
Style: Approach followed by an active investment manager in selecting stocks.
Subaccount: Sub-account includes foreign corporates or foreign individuals and those institutions, established or incorporated outside India and those funds, or portfolios, established outside India, whether incorporated or not, on whose behalf investments are proposed to be made in India by a Foreign Institutional Investor.
Sub Broker: Any person not being a member of a stock exchange who acts on behalf of a stockbroker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stock brokers.
Subscribed Capital: The amount of equity and preference capital subscribed to by the shareholders either fully or partly paid up with calls in arrears.
Sub-Prime: Describes loans that are considered inferior or sub-quality due to the high risk of default by borrowers. Sub-prime loans granted in the United States property market are generally considered to have sparked the credit crisis of 2008.
Support Level: The price at which buyers tend to buy in sufficient volume to raise the price of a given security. For example, if on a few occasions the price of a given stock has dropped to around Rs 150 per share and, on each occasion, the price has subsequently risen, a technical analyst would consider Rs 150 per share to be a support level for that stock.
Swap: Instrument designed to permit investors to exchange payment streams for their mutual benefit. Payments can be based on interest rates, currencies, or equity returns.
Swap Spread: Difference in the yield available on a generic swap and a government bond. The difference arises mainly as a result of the credit risk on the swap.
Sweat Equity: A sweat equity share is an equity share issued by the company to employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions.
Society for Worldwide Interbank Financial Telecommunications (SWIFT): A dedicated computer network to support funds Transfers messages internationally between over 900 member banks worldwide.
Switching: When a trust manager group has a stable of investments, it sometimes allows investors to switch between them. It may or may not charge a fee for this right or grant a discount to existing investors
Syndicated Investment: Investment has been spread amongst several institutional backers, generally because it is too large for a single investor to provide all the finance required.
Synthetic Investment: An investment that simulates the return of an actual investment, but the return is actually created by using a combination of financial instruments, such as options contracts or an equity index and debt securities, rather than a single conventional investment.
Systemic Failure: Failure of the entire financial system due to a domino effect in the collapse of multiple financial institutions (e.g. banks).
Systemic Risk: Risk that affects an entire financial market or system, and not just specific participants. It is not possible to avoid systemic risk through diversification.Stock Market Reference (A-Z)