Module 1   Introduction to Stock MarketsChapter 8

Commonly Used Jargons

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The objective of this chapter is to help you learn some of the common market terminologies, and concepts associated with it.

glossary Bull Market (Bullish)If you believe that the stock prices are likely to go up then you are said to be bullish on the stock price. From a broader perspective, if the stock market index is going up during a particular time period, then it is referred to as the bull market.

glossary Bear Market (Bearish)If you believe that the stock prices are likely to go down then you are said to be bearish on the stock price. From a broader perspective, if the stock market index is going down during a particular time period, then it is referred to as the bear market.

glossary Trend The term ‘trend’ usually refers to the general market direction, and its associated strength. For example, if the market is declining fast, the trend is said to be bearish. If the market is trading flat with no movement then the trend is said to be sideways.

glossary Face value of a stock – Face value (FV) or par value of a stock indicates the fixed denomination of a share. The face value is important with regard to a corporate action. Usually, when dividends and stock split are announced they are issued keeping the face value in perspective. For example, the FV of Infosys is 5, and if they announce an annual dividend of Rs.63/- then it means the dividend paid is 1260%s (63 divided by 5).

glossary 52 week high/low – 52 week high is the highest point at which a stock has traded during the last 52 weeks (which also marks a year) and likewise 52 week low marks the lowest point at which the stock has traded during the last 52 weeks. The 52 week high and low gives a sense of the range within which the stock has traded during the year. Many people believe that if a stock reaches 52 week high, then it indicates a bullish trend for the foreseeable future. Similarly, if a stock hits 52 week low, some traders believe that it indicates a bearish trend for a foreseeable future.

glossary All-time high/low – This is similar to the 52 week high and low, with the only difference being the all-time high price is the highest price the stock has ever traded from the time it has been listed. Similarly, the all-time low price is the lowest price at which the stock has ever traded from the time it has been listed.

glossaryUpper Circuit/Lower Circuit – The exchange sets up a price band at which the stock can be traded in the market on a given trading day. The highest price the stock can reach on the day is the upper circuit limit and the lowest price is the lower circuit limit. The limit for a stock is set to 2%, 5%, 10% or 20% based on the exchange’s selection criteria. The exchange places these restrictions to control excessive volatility when a stock reacts to certain news related to the company.

glossary Long Position – Long position or going long is simply a reference to the direction of your trade. For example, if you have bought or intend to buy Biocon shares then you are said to be long on Biocon or planning to go long on Biocon respectively. If you have bought the Nifty Index with an expectation that the index will trade higher then essentially you have a long position on Nifty. If you are long on a stock or an index, you are said to be bullish.

glossary Short Position – Going short or simply ‘shorting’ is a term used to describe a transaction carried out in a particular order. This is a slightly tricky concept. To help you understand the concept shorting, I’d like to narrate a recent incident that happened to me at work.

If you are a gadget enthusiast like me, you would probably know that Xiaomi (Chinese manufactures of smartphones) recently entered into an exclusive partnership with Flipkart to sell their flagship smartphone model called Mi3 in India. The price of Mi3 was speculated to be around Rs.14,000/-. If one wished to buy Mi3, he had to be a registered Flipkart user, the phone was not available for a non registered user, and the registration was open only for a short time. I had promptly registered to buy the phone, but my colleague Rajesh had not. Though he wanted to buy the phone, he could not because he had not registered on time.

Out of sheer desperation, Rajesh walked up to me and made an offer. He said he is willing to buy the phone from me at Rs. 16,500/-. Being a trader at heart, I readily agreed to sell him the phone! In fact, I even demanded him to pay me the money right away.

After I pocketed the money, I thought to myself, what have I done?? Look at the situation I’ve put myself into? I’ve sold a phone to Rajesh, which I don’t own yet!!

But then, it was not a bad deal after all. I agree I had sold a phone that I didn’t own. However, I could always buy the phone on Flipkart and pass on the new unopened box to Rajesh. My only fear in this transaction was, what if the price of the phone is above Rs.16,500?? In that case I’d make a loss, and I’d regret entering into this transaction with Rajesh. For example if the phone was priced at Rs.18,000 my loss would be Rs.1,500 (18,000 – 16,500).

However to my luck, the phone was priced at Rs.14,000/-, I promptly bought it on Flipkart, upon delivery, I handed over the phone to Rajesh, and in the whole process, I made a clean profit of Rs.2,500/- (16500 – 14000)!

If you look at the sequence of transactions, first I sold the phone (that I didn’t own) to Rajesh, and then I bought it later on Flipkart and delivered the same to Rajesh. Simply put I had sold first, and bought it later!

This type of transaction is called a ‘Short Trade’.

The concept of shorting is very counter-intuitive simply because we are not used to ‘shorting’ in our day to day activity unless you have a trader mentality 🙂

Going back to stock markets, think about this very simple transaction – on day 1 you buy shares of Wipro at Rs.405, two days later (day 3) the stock moves and you sell your shares at Rs.425. You made a profit of Rs.20/- on this transaction.

In this transaction, your first leg of the trade was to buy Wipro at Rs.405, and the second leg was to sell Wipro at Rs.425, and you were bullish on the stock.

Going forward, on day 4, the stock is still trading at Rs.425, and you are now bearish on the stock. You are convinced that the stock will trade lower at Rs.405 in a few days’ time. Now, is there a way you can profit out of your bearish expectation? Well, you could, and it can be done so by shorting the stock.

You sell the stock at Rs.425, and 2 days later assuming the stock trades at Rs.405, you buy it back.

If you realize the first leg of the trade was to sell at Rs.425, and the second leg was to buy the stock at Rs.405. This is always the case with shorting – you first sell at a price you perceive as high with the intention of buying it back at a lower price at a later point in time.

You have actually executed the same trade as buying at Rs.405 and selling at Rs.425 but in reverse order.

An obvious question you may have – How can one sell Wipro shares without owning it. Well, you can do so, just like the way I sold a phone that I did not own.

When you first sell, you are essentially borrowing it from someone else in the market, and when you buy it back, you actually return the shares back. All this happens in the backend, and the stock exchange facilitates the process of borrowing and returning it back.

In fact, when you short a stock, it works so seamlessly that you will not even realize that you are borrowing it from someone else. From your perspective, all you need to know is that when you are bearish on the stock, you can short the stock, and the exchange takes care of borrowing the stock on your behalf. When you buy the stocks back, the exchange will ensure the stocks are returned back.

To sum it all up…

  1. When you short, you have a bearish view on the stock. You profit if the stock price goes down. After you short, if the stock price goes up, you will end up making a loss
  2. When you short you essentially borrow from another market participant, and you will have to deliver these shares back. You need not worry about the mechanics of this. The system will ensure all this happens in the background
  3. Shorting a stock is easy – either you call your broker and ask him to short the stock or you do it yourself by selecting the stock you wish to short, and click on sell
  4. For all practical purposes, if you want to short a stock, and hold the position for few days, it is best done on the derivatives markets
  5. When you are short, you make money when the stock price goes down. You will make a loss if the stock price goes up after you have shorted the stock.

To summarize long and short positions…

Position 1st Leg 2nd Leg Expectation Make money when You will lose money if
Long Buy Sell Bullish Stock goes up Stock price drops
Short Sell Buy Bearish Stock goes down Stock price goes up

glossary Square off ­– Square off is a term used to indicate that you intend to close an existing position. If you are long on a stock squaring off the position means to sell the stock. Please remember, when you are selling the stock to close an existing long position you are not shorting the stock!

When you are short on the stock, squaring off a position means to buy the stock back. Remember when you buy it back, you are just closing an existing position and you are not going long!

When you are Square off position is
Long Sell the stock
Short Buy the stock

glossary Intraday positionThis is a trading position you initiate with an expectation to square off the position within the same day.

glossary OHLC ­– OHLC stands for open, high, low and close. We will understand more about this in the technical analysis module. For now, open is the price at which the stock opens for the day, high is the highest price at which the stock trade during the day, low is the lowest price at which the stock trades during the day and the close is the closing price of the stock. For example, the OHLC of ACC on 17th June 2014 was 1486, 1511, 1467 and 1499.

glossary Volume – Volumes and its impact on the stock prices is an important concept that we will explore in greater detail in the technical analysis module. Volumes represent the total transactions (both buy and sell put together) for a particular stock on a particular day. For example, on 17th June 2014, the volume on ACC was 5, 33,819 shares.

glossary Market Segment – A market segment is a division within which a certain type of financial instrument is traded. Each financial instrument is characterized by its risk and reward parameters. The exchange operates in three main segments.

  1. Capital Market – Capital market segments offer a wide range of tradable securities such as equity, preference shares, warrants, and exchange-traded funds. Capital Market segment has sub-segments under which instruments are further classified. For example, common shares of companies are traded under the equity segment abbreviated as EQ. So if you were to buy or sell shares of a company you are essentially operating in the capital market segment
  2. Futures and Options – Futures and Option, generally referred to as the equity derivative segment is where one would trade leveraged products. We will explore the derivative markets in greater depth in the derivatives module
  3. Wholesale Debt Market – The wholesale debt market deals with fixed income securities. Debt instruments include government securities, treasury bills, bonds issued by a public sector undertaking, corporate bonds, corporate debentures, etc.


  1. akrsrivastava says:

    Is it possible to short a stock in the cash segment for holding overnight or for long term? I thought only intraday shorting is allowed on cash segment.

  2. gsk71911 says:

    What are Preference Shares and how these shares are different from normal shares?

    • Karthik Rangappa says:

      Preferred shares are shares allotted on a preferential basis. The preferential shareholders have few special privileges ( voting rights, claim on dividends etc). Think about the preferential holders as Business class travellers and common shareholders as the economy class travellers….but essentially they are all flying in the same flight.

      • Nihit says:

        Preference share do not have any voting right.

      • Sankari Ramana says:

        Preference shares are those shares which get a fixed dividend payout on face value if the company decides to pay out dividends. The rate of dividend is pre-fixed , for example, if a company issued 10% Preference Share Capital then the dividend to PS holders will be (FV*no.of shares )*10% . Whereas dividend to equity shareholders will fluctuate based on the remaining profits of the company after all pay outs.
        As ESH take higher risk because of uncertainty of dividend income (not to mention the higher return they enjoy during profit season), they get voting rights (used in General Meetings) and PSH do not have the voting rights.

        • Sankari Ramana says:

          Because they get the first preference on claiming the profits of the company they are called as Preference Share Holders and the shares they hold are called as Preference Shares .

  3. Anishcharith says:

    can we short in future and options ? can we short overnight?

  4. Janardhan Reddy says:

    Hi Karthik,

    In a scenario where I take a short position on a nifty put option at a strike price of 8400, which expires on 24th Dec 2014.

    My questions are.
    1. What happens on the expiry, if the nifty reaches the strike price? and what happens if it doesn’t reach a strike price?
    2. If the nifty goes up and the premium for the 8400 strike price goes down. In this case I strike off my position. Which will be a profitable trade. Is this option available?
    3. Assuming I took a short put option on nifty at premium of 50 rs, i took 4 lots (currently nifty lot is 25) which would cost me 5000 rs. If the premium of the above position goes up to 100 and I don’t have money in my trading account. What would be the possible outcomes on this situation.


    • Karthik Rangappa says:

      This is a topic on Options, so out of context 🙂 …but anyway, here you go …

      Since you are short on a Put, your expectation is neutral to bullish..

      1) As long as Nifty is at the strike or above the strike your put option wont lose money, if Nifty is below the strike you will lose money
      2) Yes, it will be a profitable trade and you can do the same
      3) You will have to park money as margins else the position will be cut off. Suggest you speak to your broker’s RMS team for the margin requirement

      • Akash says:

        Kindly refer to your reply i. In PUT option, one will not loose money if price of underlying (Nifty here) is below the strike price of PUT (In the money) option and one will loose money if price of underlying is aove the strike price (out of money).

  5. Prashanth Aigal says:

    When i call my broker to buy shares how he would know whether i am buying for intraday or interday? do i need to tell specifically every time i call?

    • Karthik Rangappa says:

      Yes, you will have to. In fact the dealer at your brokers office will ask you this himself. If he doesn’t you will have to ensure you specify.

  6. Manish says:

    Could you please tell me procedure how to short a share(better with screen shot) as per given procedure ..when I tried to click on sell for a transection was rejected..saying that demant account have no share for this to sell…howerer I was shoring this share as I have not bought that share…

  7. Anant says:

    Sir, is this style of trading , like taking short position is also called future trading or that is different? Though this chapter of future trading has not come yet. this is just a question of doubt. Thanks.

    • Karthik Rangappa says:

      You can take short positions in both cash and futures markets. The only difference is that in Futures market you can continue to hold the short till expiry whereas in cash market you will have to close out the position the same day.

  8. aniket parsewar says:

    sir, please tell me what is future and options ?

  9. nihaal says:

    supposing only two traders ..i buy a share from other..what’s the volume? 1 or 2?



    (1) When I am shortselling I am actually borrowing the same stock from other market participant. Does the market participant know whether someone else is borrowing his stock? If answer is “no”, then if I forgot to square off, the stock will be debited from his account and after auction the same will be credited. Meanwhile if he check his DP Holding statement, of course he will know the whole thing…am I right?

    (2) Volume represent both buy and sell together. Why? Only buying / selling can count the volume…isn’t it? Why buy and sell is different? If I think some people forgot to square off at the end of the day, then those stocks goes for an auction and ultimately square off. Then it make no sense to represent buy and sell volume different.

  11. Jyoten says:

    I decide to short a stock for say Rs.400(1st leg) and now if the price shoots upto say Rs.600. I dont have the balance amount of money to buy the stock(2nd leg) , What should I do ?

  12. rsriram67 says:

    The dividend yield percentage is based on the Dividend Received / market Price * 100 . That means as per your example for Infosys the dividend yield will be 63 / 3000 * 100 = 2.1%. i think you need to change the definition under FACE VALUE.

    • Karthik Rangappa says:

      True, I made the necessary changes.

      • Rabbi says:


        I’m a little confused with this sentence > “For example the FV of Infosys is 5, and if they announce an annual dividend of Rs.63/- then it means the dividend paid is 1260%s (63 divided by 5)”.

        What formula do we use to calculate?

        Thank you

  13. Sumeet says:

    There are more than 5000 scripts in stock markets. Can i go short on any script for intraday? Or is there any specific list of stocks which can be shorted for intraday in cash segment?

    • Karthik Rangappa says:

      For all practical reasons I would suggest you look for shorting opportunities within the Nifty 50 baskets or maybe CNX 100. Going outside this basket may not be worth the risk.

  14. the_fool_on_the_hill says:

    When one loads the Market watch in Pi, the fourth column has several two letter codes — BE, BL, BT, BZ, D1, DR, EQ, H1, H2, H3 and so on. What are these two letter terms called? Is there any list available online which explains ALL these two letter terms?

    • Karthik Rangappa says:

      These are all difference instrument series as per the exchanges. Of all these series codes two you must know – EQ and B1. EQ stands for ‘Equity’ which is regular spot market. B1 is again equity but you cannot do intraday trade on these…meaning you will have to do only delivery based trades on B1 stocks. There there are these N1, N2 etc all these are bonds, debentures etc.

      Even I need to figure out where I could find a detailed description for each of these series 🙂



      refer the following link for more clarification :

      • Karthik Rangappa says:

        Oh yes, this is one of the best explanations!

      • SravanM says:

        the link doesn’t work now. Please share an alternative if anyone could.

        • Vishvendra Singh says:

          Here you go…copy pasted the post from the link!


          • EQ – Equity Shares Regular, Rolling Settlement, Intraday allowed

          • BE – Equity Sahres excluded from EQ series and traded as Trade for Trade settlement, No intraday allowed, only delivery

          • BT – Limited Physical Market, physical shares 8% of equity capital and upto the ceiling limit, Rolling Settlement, pre arranged buyer and seller

          • MF – Mutual Funds which are listed in the exchange

          • DR – Indian Depository Receipts, Rolling Settlement

          • DE – Indian Depository Receipts, Trade for Trade Settlement

          • ME, DL, DT, BZ, IT –

          [email protected] – Partly paid equity shares, Rolling Settlement

          [email protected] – Partly paid equity shares, Trade for Settlement

          [email protected] – Non convertible preference shares, Rolling Settlement

          [email protected] – Non convertible preference shares, Trade for Trade Settlement

          [email protected] – Fully convertible preference shares, Rolling Settlement

          [email protected] – Fully convertible preference shares, Trade for Trade Settlement

          [email protected], [email protected] – Non convertible debt instruments, Rolling settlement

          [email protected], [email protected] – Non convertible debt instruments, Trade for Trade settlement

          [email protected] – Fully convertible debt instruments, Rolling Settlement

          [email protected] – Fully convertible debt instruments, Trade for Trade Settlement

          [email protected] – Convertible warrants, Rolling settlement

          [email protected] – Convertible warrants, Trade for Trade settlement

          Note: @ signifies character 1-9 or A-Z, except the existing Series Codes

          • A – Equity Shares Regular, Rolling settlement, Intraday allowed

          • Z – Shares of non compliant companies which failed to meet listing requirements, Rolling settlement

          • ZP – Shares of non compliant companies traded and settled in Physical mode/ Optional Demat mode

          • B – Equity shares excluded from A and Z category, Rolling settlement

          • T – Shares which come under Trade for Trade category, No intraday allowed, only delivery

          • F – Fixed income securities

          • G – Government securities

          • D – Shares which are listed though direct listing norms, Rolling settlement

          • DT – Shares which are listed though direct listing norms, Trade for Trade settlement

          • M – Shares listed under SME Small and Medium Enterprise, Rolling settlement

          • MT – Shares listed under SME Small and Medium Enterprise, Trade for Trade settlement

          • E – Exchange Traded Funds

          • I – Interest Rate securities, underlying

          • P – Shares traded and settled in Physical mode/ Optional Demat mode


          • FUTIDX – Futures on Index

          • FUTIVX – Futures on Volatility Index

          • FUTSTK – Futures on Stock

          • OPTIDX – Options on Index

          • OPTSTK – Options on Stock

          • SP-FUTIDX – Calendar Spread Order Futures on Index

          • SP-FUTIVX – Calendar Spread Order Futures on Volatility Index

          • SP-FUTSTK – Calendar Spread Order Futures on Stock


          • IF – Index Futures

          • SF – Stock Futues


          • FUTCUR – Futures on Currency Pairs

          • FUTIRC – Futures on Government of India Bonds

          • FUTIRD – Futures on 10 Year Notional coupon bearing GOI security

          • FUTIRT – Futures on Government of India Treasury Bills

          • OPTCUR – Options on Current Pairs

          • SP-FUTCUR – Calendar Spread Order Futures on Currency Pairs

          • SP-FUTIRC – Calendar Spread Order Futures on Government of India Bonds

          • Sp-FUTIRD – Calendar Spread Order Futures on 10 Year Notional coupon bearing GOI security

          • SP-FUTIRT – Calendar Spread Order Futures on Government of India Treasury Bills

          • UNDCUR – Underlying Currency Pairs

          • UNDIRC – Underlying Government of India Bonds

          • UNDIRD – Underlying 10 Year Notional coupon bearing GOI security

          • UNDIRT – Underlying Government of India Treasury Bills


          • FUTCOM – Futures on Commodities

  15. Adam says:

    What does one exactly mean by selling pressure or a bearish stock??! If they say that there is selling pressure on a stock this means that a lot of people are selling it but on the contrary it also means that those many people are buying it! So whats this whole thing about?? Why this selling pressure and the prices going down when people are also buying? Am I missing

    • Karthik Rangappa says:

      Adam – when there is a selling pressure the sellers get desperate and they want to get rid of their stocks (for whatever reasons it could be). Hence they would accept lower and lower prices for their stocks and hence the price comes down.

  16. Anu says:

    typo: that I dint own

  17. Adam says:

    A stop loss order is a one day order right? So say if I have 20 stocks in my holdings will I have to sit and place sell orders at my stop price everyday!? Isn’t there a more convenient way of doing this? Also are trailing stop loss orders also valid for just one day?

  18. Krishnan says:

    suppose I short an option ,will there any further margin calls (I have already paid the margin at the beginning) if the current premium is > than the premium at which I shorted the option (asin the futures)

  19. Ankit says:

    Hi Karthik,
    I have 2 doubts, first one is related to pre market opening. How we can trade on it and how it is regulated
    Second one is related to disclosed quantity. What is this and how it is beneficial for any trader

  20. random_guy says:

    I do not think I understand what you mean here. Can you rephrase what you have written in these two lines and explain them.

    “When you first sell, you are essentially borrowing it from someone else in the market, and when
    you buy it back, you actually return the shares back. All this happens in the backend, and the
    stock exchange facilitates the process of borrowing, and returning it back.”

    • Karthik Rangappa says:

      Assume you do not have Infy shares in your DEMAT. However you click on sell in the order form and sell 100 shares. Even though you do not have the 100 shares, your sell order will go through. And this will be facilitated by the exchange.

      • RG says:

        Hi Karthik,
        Based on your statement, does this mean that I have shorted the stock with no intention of doing so?

        • Karthik Rangappa says:

          Yes, if you directly sell the stock without owning the stock, then you have shorted the stock, with or without your intentions to do so.

  21. srikantheswar says:

    If you are long on a stock squaring off the position means to sell the stock. Please remember, when you are selling the stock to close an existing long position you are not shorting the stoc k! – Does this mean squaring off means a complete order i.e both legs happen within the same day & if the order is sold from Demat it is not called squaring off ?

    • Karthik Rangappa says:

      Square off is a term used to complete an existing open position. Traders generally use it in terms of futures and options trades as opposed to DEMAT related trades.

  22. k g misra says:

    I am first time user of zerodha. I want to know full form of abbreviations like no, IOC. which is on buy or sell screen

  23. Arup says:

    Hi, Suppose I have gone long with 500 shares of a particular company in intraday equity and currently my expected price has not reached for squaring off. At this point, will I able to do short sell aa well? (Not selling the earlier shares I bought, I will keep it for a higher price if it comes later in the day)

    • Karthik Rangappa says:

      If you do this on intraday basis, it would get netted out and the balance would be open. For example you bought 500 shares, sold 300 shorts…you’d be net long 200 shares.

      • Arup says:

        Thanks Karthik for the clarification. I have been really enjoying reading all you modules, such simple and relevant examples you come up with! Fantastic! Keep up the good work! Currently reading Option theory. Enjoying every bit of it. Also have you come up with the trading strategies module, yet?

        • Karthik Rangappa says:

          Thanks for the kind words Arup!

          Not yet, we are currently working on Module 8 – currencies, commodities etc. Will start work on that after this.

  24. David says:

    Hi Karthik, I am first time user at Zerodha and have 2 questions
    1) If I have 1 lakh in my Demat account, what is margin provided by Zerodha for the intraday trades, is it like I can buy shares worth more than 1 lakh in my account even though I have already purchased shares worth 1 lakh.
    2) All intraday trades for a equity should be closed on the same day or would I get to carry over to next day and how long can I carry over. Do we have extra charges for carrying them over as I have used the margin provided by Zerodha.

  25. Hitesh says:

    Hi Karthik. I have a doubt. In the statement “If you have bought the Nifty Index with an expectation that the index will trade higher then essentially you have a long position on Nifty. If you are long on a stock or an index, you are said to be bullish.” What do you mean when you say If you have bought nifty index? As far as I was able to understand from previous chapters that we buy shares of company so I am able to make sense of the phrase to be long on some company’s share but I am not able to make sense of to be long on Nifty. Please explain this.
    Does this mean that to buy shares of some company listed in NSE?

    • Karthik Rangappa says:

      Hitesh – just like stocks, you can trade the Index (Nifty) as well. Trading in Index happens via the Futures and Options segment. So if I have bought Nifty Futures, I’m said to be long Nifty, likewise if I have shorted Nifty Futures I’m said to be short Nifty.

  26. Hitesh Menghwani says:

    When we short a stock that means we are borrowing that stock from someone else and selling to some other person. So my question is there any time limit under which we have to buy that stock after selling and return that to the person from whom it is borrowed?

    • Karthik Rangappa says:

      Well, shorting stocks (in spot market) works only on a intraday basis. So you should buy it back by end of day before the market closes.

  27. Arup says:

    Hi Karthik! I can’t stop appreciating the beautiful work you and your team are doing! Wonderful for people new to share markets.
    Just waned to know, if you have any pseudo trading tool (or know of any such software/tool available anywhere), which mimics the exact market scenarios and people new to trading can use it to gain confidence before starting with actual trading? If not, I would kindly suggest your team to roll out something similar, as it will go a long way in implementing the beautiful theories you have given in the modules and get a hands on experience along with confidence before trying out the real thing with real money!!! Best wishes!

  28. Prakash Babu says:

    my question i just simple, as i am just a beginner in intraday trading. the difference between a bid price and an offer price is , in a bid price a potential buyer intends to buy a stock at that price and the ask price is a potential seller wants to sell a stock at minimum price. so, if i want to buy in open market. i have to buy from ask price or offer price and similarly if am selling i have to sell to best bid price. it is right if come to a conclusion that more volume in offerprice where potential seller intends to sell indicates a bearish trend, as more amount are waiting to sell. and high bid volume suggeting more people are inclined to buy a stock. so can i come to a conclusion that when there are more bid volume ( more shares waiting to buy) indicate a bullish trend and more offer price volume ( where more people intends to sell at a said price) indicates bearish trend. kindly enlighten me.

  29. NareshS says:

    Hi Karthik
    If I have sufficient funds in my account, will the MIS orders still be squared off at the end of the day?

    Say I buy stocks in the morning worth 1 lakh with just 10 thousand by placing MIS order.
    In the afternoon I transfer Rs 1 lakh in my trading account.
    Will the the stocks bought in the morning still be squared off on the same day?
    Is there a way to hold it for longer duration at the same price bought earlier with margin?
    Will there be any charges or so?


  30. Vishal Oturkar says:

    Hi Karthik,
    Apologies if this questions sound stupid.
    but wanna knw , is short trade should happen on the same day ?
    i mean if i forget to sell the stock at the end of day for returning then what would happen ?

  31. Sudheer says:

    Hi karthik,
    I want to check if this is a possible and allwed scenario.
    Day 1: Buy a share A at price 1000 for long in CNC mode.
    Day 2:Some bearishness forms on the share. Can we short this stock by selling high and buying low and still continue the long holding?
    are these types of trades allowed?

  32. Pranay Rastogi says:

    Are BankNifty Options very liquid as compared to other Options?

  33. harikrishnan says:

    Hi, Suppose I have gone long with 500 shares of a particular company in normal delivery and currently my expected price has not reached for squaring off. At this point, will I able to do short sell well? (Not selling the earlier shares I bought, I will keep it for a higher price if it comes later in couple of day)

  34. Indrani Banerjee says:

    Previously we knew that regarding Transaction of equity shares, profits from selling shares which are held for 365 days or more, come under long term capital gain and are exempted from Capital Gain tax, but as per the Union Budget 2017-18, exemption under section 10(38) from income arising on transfer of equity share acquired on or after 1st day of October, 2004 shall be available only if the acquisition of share is chargeable to Securities Transaction Tax under Chapter VII of the Finance (No. 2) Act,2004. Does this mean that shares bought through ZERODHA will not get the benefit of Long Term Capital Gain in equity as ZERODHA did not deduct any charge while shares were purchased for the purpose of investment & holding in the Portfolio?
    Kindly answer this query.


    Indrani Banerjee

    • Karthik Rangappa says:

      For the shares you buy from Zerodha, STT is deducted, hence eligible for the LTCG tax benefit.

      • Indrani Banerjee says:

        Thanks, but when I buy shares for say 100/-, the value of shares bought is reflected as 100/-. If STT is deducted, then the value of shares bought should have been less than 100/-. I cannot understand this part. Is STT deducted at the time of purchase of shares?

      • Vimal says:

        A strict reading of teh IT tax act does not allow STT as cost. Hence it is safer not to add STT as cost to the purchase price or deduct STT as a cost from selling price. In short, profit or loss will need to be computed excluding STT on both legs.

  35. Ronak says:

    Hi Karthik,
    Amazing efforts by Zerodha to have put this together for a complete novice like me.
    Would like to know whether a company’s share split ie total number of shares a company is split into, only depends on the Face value and seed capital ? Also whether it would be possible for the company to change this split anytime after it has been listed

    • Karthik Rangappa says:

      Thanks for the kind words, Ronak.

      The split depends on how the company intends to structure it. Split is reflected in the face value. Seed capital has nothing to do with it.

  36. Prakhar Srivastava says:

    Hello sir,
    My question is:
    1) Can we short shares for a different price than market as done by your friend in the example where market price was not known?
    For eg .If stock is trading at 405 can we short at 409 or less
    2) In Volume doesn’t double counting take place?

  37. Anil says:

    Sir, If i have buy CNC share of at Rs. 140 and i wish to sell it at Rs. 160. If there any formula/command by which i can set my sale price. Similarly can i set buy price for any share in CNC type so that i don ‘t eed to look in to market everyday ??


    • Karthik Rangappa says:

      Unfortunately, you cannot carry forward orders on a overnight basis. This would limit you from doing what you are looking for.

  38. Ajay Badal says:

    What does mean BZ , BE etc please clarify.

  39. Anil says:

    Sir what does Stop loss order mean when you are buying a stock (How there can be a loss at the time of buying. Loss can occur only at time of selling)

    • Karthik Rangappa says:

      Loss can occur when the stock price falls below the purchase price. Suppose the stock price starts to drop and you have decided to get out of the trade if the price falls below a certain price level, then that price level is called the stop loss.

  40. Ayush says:

    What does previous close mean?
    Does it mean the last price of trade in a day at particular time period on which the stock has been traded
    It means the previous day close price?

  41. Suraj Giri says:

    An obvious question you may have – How can one sell Wipro shares without owning it. Well you can do so, just like the way I sold a phone that I did not own.

    When you first sell, you are essentially borrowing it from someone else in the market, and when you buy it back, you actually return the shares back. All this happens in the backend, and the stock exchange facilitates the process of borrowing, and returning it back.

    In fact when you short a stock, it works so seamlessly that you will not even realize that you are borrowing it from someone else. From your perspective, all you need to know is that when you are bearish on the stock, you can short the stock, and the exchange takes care of borrowing the stock on your behalf. When you buy the stocks back, the exchange will ensure the stocks are returned back.,…….—-
    I when I first sell how I am borrowing it from someone else….
    And then when I buy it back how I am returning it.
    Very hard to understand this part.
    And same question again how can I sell something which I am not owning

    • Karthik Rangappa says:

      Suraj, with this information, I’d suggest you short 1 stock in the market and buy it back the same day. Dont worry about the profit/loss….just do the transaction and I’m certain you will understand this better 🙂

  42. abhishek tripathi says:

    I have only 5000 trading capital , is it possible for me to trade in option and earn profit .

    • Karthik Rangappa says:

      It really depends on how you trade 🙂

      But frankly, 5K is bit tight. Please use this money to invest in a stock or two and experience investing for long term.

      • Abhishek Tripathi says:

        what about doing intraday with 5k as I’ve bit knowledge of intraday and what is the minimum capital to start with options trading?

        • Karthik Rangappa says:

          There is no minimum capital for intraday. Sure, you can go ahead and do it. Everything is a learning experience after all 🙂

  43. Rahul Ghegadmal says:

    Do you have your office/representatives in Pune? If yes, please text me the address and contact number on 8983559413.


    • Karthik Rangappa says:

      Here you go –

      Phone – (020)-66209170, 9742142020, 9739162020

      Address –
      Mr. Basavraj / Mr. Uttam
      Unit No. 2 First FloorBuilding No. B-3
      Cerebrum IT Park Complex
      Kumar City Kalyani Nagar
      Pune- 411014
      [email protected]

  44. Hi Karthik,

    I’m absolutely loving the varsity. What I want to ask is, if it’s possible to short in delivery. I’ve only heard of shorting in MIS on Kite. But can I sell the share today and buy it back maybe tomorrow or some days later?

  45. suraj says:

    For every buyer there needs to be a seller and vice-versa, right?
    Then how is the volume actually calculated, what it actually signifies?
    Suppose I have one chocolate and I sell it to my friend. If we calculate the volume, simply, as sum of sells and buys, it comes comes out to be 2 chocolates. But this doesn’t make sense, because there was only one chocolate which changed hands. And even after the transaction there is only one chocolate.
    What am I missing here?

  46. Gangadhar says:

    Hi Karthik… Coming to the continued topic on volume.. fr every buyer there has to be seller right … so the prices are going down some one should buy fr the trade to get executed .. In a completely bearish market who are these buyers….. can you throw some light

    • Karthik Rangappa says:

      In a bull market, buyers are willing to buy at any price the seller wants hence the prices tends to go higher. Likewise, in a bear market, the sellers are desperate to sell at any price, hence the price keeps dropping.

  47. Ramesh says:

    Is there a way to know how many short position that are open?
    When doing short, from where its borrowed? Seems there is virtual outstanding shares which is increased. Looks like its only money transaction being made.
    End of the day if no one is selling, how will the short position close?

    • Karthik Rangappa says:

      You can look at the OI data and figure out how many shorts are there. However, you cannot know this in the intraday spot market. End of the day if no one is selling – then the procedure is different for different segments. Suggest you read the module on Futures trading as well.

  48. Rakesh Kumar says:


    The way shorting is explained is great. I have one doubt and request you to clarify or share your inputs.

    Shorting, i.e, selling can be done only in intraday or f&o contracts right? They can’t be done with CNC (Btst). Am I right?


  49. P.s.perumal says:

    If a company offers a bonus to the share holders means the market price will move downward or not
    For example : if a company announced that 1:1 as a bonus to the share holders .now the current market price is rs 100 per share after this announcement the share price will be falls to rs 50 or it will remain same or else some other thing

    • Karthik Rangappa says:

      It will reduce to the extent of the bonus announced.

      • Swati says:

        Hi Karthik,
        First of all thanks for the wonderful material throughout the Varsity chapters.
        I have one question here w.r.t the above question on bonus and it’s impact on share price. Is there any way one can calculate using mathematical formula the expected decrement in stock price because of the bonus announcement. If yes, can you please elaborate how to do the same.

        • Karthik Rangappa says:

          Swati, glad you liked the content 🙂
          Yes, the math is already explained in the chapter. Can you kindly go through it once?

  50. P.s.perumal says:

    What is the difference between bonus announcement date and record date and exbonus date

  51. kunal says:

    can u plz give me the ans of my question series
    *when company announce an annual dividend of Rs.63/- then it means the dividend paid is 1260%s (63 divided by 5).
    1.okk but 1260% of what??
    is that the total price of shares we hold (i.e. 5 ,on above example) and if yes then
    2. how to calculate the 1260% of just 5
    3. why 63 divided by 5
    4.what is difference b/w asset class ,securities and market segment

    • Karthik Rangappa says:

      1) Yes
      2) 1260% of Face Value i.e Rs.5
      3) 63/5 – expressed as a percentage is 1260%
      4) Thats how you calculate the percentage
      5) An asset class is something that has a future economic value. Security usually refers to Equity.

      • kunal says:

        no thats not what i meant in que 2
        i asked that if i have 1 share of $$ company and they announced a annual dividend of 63 than 63 divided 5 =1260%
        than what amount i get annualy for JUST 1 SHARE (i.e. rs 5)
        in short how will i calculate 1260% of 1 share i.e. 5/-
        and what is market segment??

        • Karthik Rangappa says:

          If the dividend per share is Rs.63, then you will get 63.

          Market segment is different segments within capital markets like – Currency, Equities, Derivatives etc.

  52. VINAY VERMA says:

    Kindly explain square off in a laymans language by example

    • Karthik Rangappa says:

      If you buy a stock, then square off means you sell the stock to close the position.
      If you short a futures contract, then square off means you buy back the futures to close the position.
      In general, an action which will close an existing position in the market is referred to as square off.

  53. Ragav says:

    Hi, kudos to ur team..
    I have a questions..I am beginner
    1. How can I buy ipo in primary market? ( During this primary market the ipo index is not listed in nse BSE but how can I buy shares?
    2. Consider this scenario if I sell 100 shares of Infosys at ₹360. to make gain I have to buy it below ₹ what is the time period to buy it.( Did I need to buy within a day or else wait for next day to come below ₹360)

    • 1. IPO can be bought using ASBA service provided by your Bank whenever the company is open for issue. If allotted, the shares will reside in your Demat and can be traded in the secondary. This is covered in detail in Chapter 5 of this module
      2. Shorting for Equity can only be done on an intraday basis. At Zerodha, the scrip you short will be auto squared-off (Bought) at 3.20 PM.
      However, you can take short positions for a longer time-frame in the derivative markets. You can learn about shorting in Futures in Module 4 and short position in Options in Module 5

  54. P.s.perumal says:

    Settlement date for (i.e when it reaches demat account after record date) bonus and split shares

    • Karthik Rangappa says:

      Can you kindly elaborate, please? Thanks.

      • P.s.perumal says:

        I had bought a areydrg share on two weeks before and a company has give a split on 13th Nov the split shares are available on my portfolio but they didn’t come to my demat holdings when it come to my demat holdings

  55. Balachandar says:

    I have bought one script which shows now this is BZ series. I couldn’t able to sell this script now in Zerodha. My request was rejected.

    Could you please assist what BZ series mean? Why didn’t I able to sell this script in Zerodha?

    Thank you in advance


  56. harish says:

    i am having an account with ZERODHA .i want to give an suggestion that is it position to add 4 hrs chart option as well in zerodha kite platform.

  57. Ashish Sharma says:

    How to convert an already processed MIS order (stock purchased) to CNC?
    Can I take the delivery of a stock purchased on MIS as I don’t want to square it off at a lower price as due to fall in price, I have changed my plan suddenly?

  58. sumeet says:

    sir i want to know about sgx nifty(i.e.singapore) and its connection with indian nifty,how this sgx nifty affects the price of nifty before opening of indian market which leds to gap up opening,i want to know this in detail,plz tell me.
    thanxx in advance

    • Karthik Rangappa says:

      SGX is Nifty futures traded on Singapore stock exchange, just like the way Dow is listed on NSE. It does not really have any effect on Indian markets. Rather, SGX follows Nifty movements once Indian markets open. However, before the Indian markets open, traders look for the prices of SGX to get a sense of where the Index could open.

  59. Sriram says:

    I did not understand the part about the FaceValue Can u please give me a better explanation?

    • Karthik Rangappa says:

      Face Value is the nominal value of a share. This is the notional value assigned at the time of creation of these shares. Usually, Rs.10, 50, and 100 are quite a common face value of shares.

  60. Aakash Khemani says:

    I’m trying to place a short sell order on a stock but it gets rejected.
    in the comments it says “check holdings ,no holdings present” and “across exchange across segment across product”.
    Can we go short only in F&O?
    and if not then how do I execute a short order on a normal stock?

  61. Chethan says:

    Hello sir
    Is shorting possible in equity??
    i understand and as mention in the blog related to BTST/ATST( Buy/Acquire Today Sell tomorrow) Zerodha does not allow to sell the shares unless we have it in our Demat account in order to avoid the defaulting situation.
    But in the chapter you mentioned that while shorting exchange borrows the shares from other market participant and delivers it..
    Could you please give me clarity regarding this.

    • Karthik Rangappa says:

      Shorting in equity is possible only on an intraday basis. However, for the overnight short position, you can always use derivatives.

  62. Aakash says:

    Suppose I buy 600 ce of a script at suppose 2 rs with a lot size of 1000
    By expiry it becomes 0.05 and I’m holding it after expiry.
    Do I hvae to pay the stt ?
    I mean my maximum loss is 2*1000 + brokerage + tax right?
    or anything more than that?

  63. Ritu says:


    I had bought URJA GLOBA on BSE as CNC.
    My holdings are reflecting it as “URJA-BE”. I dont understand. The URJA GLOBA closed at 11.40, i had bought at 9.7 average cost.

    But the holdings are showing a loss at a closing price of 9.5.
    I don’t understand this. Please help.

    • Ritu, although you had bought the stock from BSE, Kite will by default show the NSE price. You can still choose to still the stock in BSE which is trading at a higher.
      Right now there is a price difference between both the exchanges which will eventually get thinner(check this screenshot)

  64. sajilesh kurup says:

    Incase of Short

    If in first leg i will sell first at Rs 459 /-. to buy in second leg at Rs 441/- will i benefit in this bearish situation ?

    bit confused with concept of short

  65. Krishna Deshmukh says:

    What is the difference between face value (fv) and stock price ?

    • Karthik Rangappa says:

      Face value is the notional/nominal value of the share assigned at the time of share creation. Stock price is the price discovered by the markets.

  66. Nitin says:

    If I wish to short a stock today, how to be sure that the stock has been shorted by me (the concept is not clear) and if it is shorted today after how many days can I buy that stock ?

    • Karthik Rangappa says:

      The short position will reflect in your positions tab. You make money when the shorted asset goes down in value and lose money when it goes up. If you short in EQ, you can hold the position for only the day. If you short the position in Futures, you can carry the position forward overnight.

  67. Nitin says:

    Can I buy a stock in BSE and sell on intraday in NSE and vice versa (I mean arbitrage) ? Also tell me in detail whether can I do this for buying a stock in BSE and sell on next day in NSE and vice versa ?

  68. Sourav says:

    If I have 500 in my account and I decide to short a stock at 400, if the value of that stock keeps rising forever way past what I have, could I get away with never having to square off the position?

    • Karthik Rangappa says:

      All short orders in EQ is squared off on an intrday basis. You cannot carry forward the position overnight. For overnight positions, you will have use the futures.

  69. retaish says:

    in above para its written : Volumes represent the total transactions (both buy and sell put together) for a particular stock on a particular day. For example, on 17th June 2014, the volume on ACC was 5, 33,819 shares.

    also note : every seller has buyer. so if 6 shares are bought then 6 would have been sold by seller. so volume should be multiple of 2.?

    please comment.

  70. shishir kumar das says:

    plz explain short with another simpler example.i couldnot understand completly

  71. RAJAN . A.T. says:

    Dear Karthik Sir, Thanks for your valuable reply against my query about deliverable quantity & traded quantity.
    Now going through the commends of 8th chapter of introduction, ” Commonly Used Jargon ” Mr. Ramesh’s query & your answer,

    Ramesh says:
    June 17, 2017 at 7:34 am
    Is there a way to know how many short position that are open?
    Karthik Rangappa says:
    June 18, 2017 at 8:59 am
    You can look at the OI data and figure out how many shorts are there.
    Please elaborate how the Open Interest data can be used to find out the no. of SHORTS ?
    Thanks & Regards,

    Rajan A. T.

  72. RAJAN . A.T. says:

    Is the difference between the CALL side OI and PUT side OI the no of Shorts available?
    Does my assumption is correct sir?

    Thanks and regards,
    Rajan. A. T.

  73. alex joseph says:

    hello karthik,
    i need a feedback on nifty trading academy…
    or can you suggest me the best trading academy in india to become a real trader
    it would be highly appreciated

    • Karthik Rangappa says:

      Alex, I have no experience dealing with any of these academies. I always get a feeling that these academies are there to rip you off, but clearly, I may be biased 🙂

  74. GURPREET SINGH says:

    Hi Karthik,

    As you might be aware today that Rcom shares surged 59% in a singled day session, i am really intrigued. Isn’t there an upper circuit limit of 20% on the movements in a single day on Indian scripts. I googled but didn’t find much info.Please clarify?


  75. Mahendra Pawale says:


    I have few shares of Vakarangee LTD which now trading in BE-series. I am trying to sell these shares without success. Is there a way to get out of these stocks asap ?


    • Karthik Rangappa says:

      Mahendra, unfortunatley it’s hitting lower circuits everyday. Your only option is to place an order (market) every day as early as possible.

  76. Hina says:

    Hello sir ? Suppose some share closed at rupees 100 on Monday and it opened at 110 on Tuesday, so does it mean that the first trade that executed on Tuesday was at 110 ?

    • Hina says:

      Also sir as you said that a stock cannot move more than 20% in a day, so this 20% is of the opening price ?

      • Karthik Rangappa says:

        Some stocks have a 20% restriction, some have 10%, some have 5%, and some have no restriction at all. The limit can be breached any time during the day and not necessarily at the opening.

    • Karthik Rangappa says:

      Yes. This is also called a gap up opening.

  77. Rahul says:

    Hello sir,
    I have a simple question. Can there be ever situation in India, in which retail investors are banned from investing in stock market ? I am talking only about investing and trading in stocks by retail investors in cash segment … NOT the derivatives. Can there be ban on retail investors to invest or trade in stocks ?

    Thank You

    • Karthik Rangappa says:

      No, I dont think that would ever happen as it would defy the very purpose of capital markets.

      • Rahul says:

        Thank you sir, I got it what you are telling, just one last query sir ,,, that SEBI argues that in F&O , retail investors make losses and do risky trading which they are not aware of much,, and trying to put them somewhat away from it. Similarly can they not say that retail investors make losses in investments in shares or trading in shares … so that is the reason to ban retail investors from investing and trading in shares (cash market) and instead allow retail investors to invest ONLY through MUTUAL FUNDS and not from themselves ?

        Is this a possible situation according to you sir ?

        Thanks in advance ..

  78. Deva says:

    hi Karthik,
    My query is regarding 52 week high and low. When the price of the stock reaches 52 wk high,it indicates bullish trend. So,is this the right time to buy that particular stock or should we wait for the prices to fall down to its lower side?

  79. Deva says:

    one more query,though it is not related to this topic- Mutual funds are also subjected to market risks,then why is it relatively safer to invest in this than the stocks?

  80. Saurabh says:

    sir , does face value changes on daily basis ? or it is fixed forever ?

  81. Kalyani says:

    Best Explanation for ‘short position’ I have ever come across. Thank you so much !

  82. Sourabh kumar says:

    I bought a partly paid shares of IBventures through zerodha. Now the share had stop trading as they have made first call on shares but i dont undersatnd how will i be able to pay them via ZERODHA. Please help. I m very new here bought the shares without knowing its partly paid.

    • Karthik Rangappa says:

      What is partly paid shares, Sourabh? Can you share the instrument name or ISIN?

      • Sankari Ramana says:

        Mainly during IPOs, the company chooses to receive money on shares in different portions at different times. For example- X Ltd. issued 10000 shares of INR 10/- each at a premium of INR 20 /- , and they call only for INR 15/- first then INR 150000/- is called as Share Application Money. Then the company can choose to call for the rest of the unpaid money at once or in sections. That call made after the application money is called “First Call Money”. If the above co. makes a call of INR 10/- then INR 100000/- will be recorded in their books as First Call Money. So on and so forth till all the unpaid money is received by the money.
        Hope this helps

  83. Sankari Ramana says:

    Sir I have a doubt regarding shorting.
    From the point of view of the back end lender who is lending his shares for someone who wants to short, what is the benefit he is going to get when he receives his shares back from the borrower or trader?

  84. Siddhesh says:

    Hello Karthik,
    I have a doubt on Shorting. Just for a trial I sold the Stock of some company, which I dont have bought earlier (Holding “0” for that particular stock), when I placed “Sell” order without owing it, the Status of the order shows as “Rejected”.

    I am still confused with Shorting.
    Suggestions please 🙂

    • Karthik Rangappa says:

      When you short, make sure the ‘Product type’ toggle is switched to MIS and not on CNC. This will will work 🙂

  85. Pulkit says:

    Awesome description & thanks a lot to teach in very easy way .
    One suggestion is to have next and previous chapter link on each page .

  86. Aravind says:

    what is d1 series in nse?

  87. Naveen Dahiya says:

    Sir,what does BZ series mean?

  88. Hemant Kumar says:

    Hii Sir,
    Squaring off concept used after purchase of share or before purchase of share.
    Please guide me in both the cases.
    1 Long position
    2 short position

    • Karthik Rangappa says:

      To square off a long position, say 100 shares of Infosys, you will have to sell 100 shares of Infosys. To square off a short position of 1 lot of Infy, you will have to buy back 1 lot of Infy.

      • Hemant kumar says:

        We can sell of our holding portion or have to sale whole holding, suppose i have infosys 100 share then can i square off for 20 share or part of my holding

        • Karthik Rangappa says:

          Yes, you can partially sell your holdings.

          • Hemant Kumar says:

            Thank you Sir for quick reply,
            Two more doubt in this chapter.
            1. What does mean of 52 week high/low.
            Is it mean last financial year 52 week high/low or back from the present date.
            suppose today( 27/12/2018) show highest price for any share is Rs 10000/-
            This highest price is in FY 2017-18 or from 28/12/2017 to 27/12/2018.
            which one is right.

            2.Short position is done in intraday only or it can be done in delivery as well.

            Someone told me that if i short share and don’t buy it back same day before closing the market then may be penalty imposed by stock broker or NSE or BSE.

          • Karthik Rangappa says:

            1) It just refers to the last 52 weeks from today
            2) Short in the spot market is only intraday but in futures market, you can carry forward

  89. Tejas says:

    Hi Karthik Rangappa,
    Can you please help me with the shorting concept or short selling please

  90. Mohit says:

    Sir I have one ques,
    after a bonus issue or stock split, as seen in some of the stocks quite often the price tends to correct to the extent of bonus or split announced, so my ques to you is WHY.
    Why someone wants to sell so heavily that the share price falls, its a loss for every investor, they are easily getting their money doubled by getting double amount of shares, overlooking the fundamentals, why market participants wants to drag the price down of the scrip, skip the fundamentals part just talk technical.

    • Karthik Rangappa says:

      Mohit, the fall in the share is not because of selling, but rather due to the adjustments made due to the corporate action. I’ve explained this in the chapter.

      • Mohit says:

        well, if the fall is not because of selling so who adjusts this price, I mean if people are not involved in dragging the prices then who adjusts this price exchange or company, because somebody has to tweak something in order to change the price of stock getting my point.

        • Karthik Rangappa says:

          The exchange does the adjustments to the prices.

          • Mohit says:

            ok so if exchanges tweak the prices to the extent of corporate action, then sometimes in some stock it has been observed that after the bonus or issue the price didn’t changed much, why is that.

          • Karthik Rangappa says:

            Can you share the name of the scrip, Mohit and the exact date of the corporate action?

  91. Rohit agarwal says:

    What’s the difference between upper and lower circuit and upper and lower price band.

    • Karthik Rangappa says:

      The circuit limits are like upper and lower bound range within which a stock can trade for the given day. In the event, it touches those limits then the stock freezes for the day.

  92. Shubham says:

    Please give me a real life example w.r.t difference between
    Face Value
    Market Value
    Book Value.

    Thanking you in anticipation.

    • Karthik Rangappa says:

      Let me take ICICI as an example –

      Face value is the notional value assigned to each stock, useful for corporate actions. ICICI’s FV is Rs.2.
      Market value is the share price, for ICICI it is around 402 per share.
      Book value is the entire worthiness of ICICI (including all its assets) and divided by the total number of shares. Book value is ard 170 for ICICI.


    In kite web, i have changed pin1 & pin2 as stocks, i want to keep nifty and sensex indices in pin1 & pin2, how to change please guide me.

  94. Ratheesh says:

    Do you need to pay while shorting ? or only when you buy back? how this works?

    • Karthik Rangappa says:

      Yes, you will have to have margins in the account to short. In fact, any new position that you intend to initiate requires margins.

  95. Luc says:

    Hey Karthik,
    I am not sure to well understand the meaning of the face value of share. Actually, I have trouble to distinguish the FV from the current value of a share. In what are they different?

    • Karthik Rangappa says:

      Luc, the face value of a share in the nominal value of a share, which is assigned at the time of creating it. Typical face values are 5, 10, 100 etc, with 10 being the most commonly assigned face value.

      The current value is the value for the share in the market, which is actually market-driven – an outcome of trading activity.

  96. Luc says:

    Thanks a lot!

  97. Harshvardhan Singh says:

    As everyone says, why don’t you publish a book of this content of Zerodha Varsity, so that it could be read anywhere and everywhere.

  98. Harshvardhan Singh says:

    Thanks for replying so fast. Yes, I have just realised that the PDF of all the Module is available at the bottom of the page. The content is too rich in quality, at the same time it is easy to understand for lay man like me.

    Thanks again for the great work.

  99. Ravi Singh says:

    What is BZ?

  100. Shriram says:

    In the ‘Positions’ tab in Kite, if we click thee dots, there are 3 options, i.e. add, exit and convert.
    Exit and convert position is easy to understand and its description is available in Varsity.
    What is the use of ‘Add’ position ? I cant find any reference in Varsity

    • Karthik Rangappa says:

      Add position allows you to add more to the already existing position. So if you are long 1 lot of Nifty, by clicking add you can add more to the position.

  101. Ankit says:

    Are upper circuits and lower circuits are fixed for a particular day ?
    Or the value of these circuits can be re-fixed on that day ??

  102. Rajesh R Thakur says:

    Can we say a long position is a synonym of Buy position?

  103. Vijeet says:

    I had shorted IRCTC for 944 on March 30. Since then, it has been on UC. I have placed GTC buy order. No luck till now. Currently, it is at 1137. Am I staring at a nightmare? It looks like it will stay on UC for a while.

  104. Dhaval kumar says:

    What is the meaning of T?
    I purchase bank of baroda but in watchlist
    It appears quantity as T1:20.
    I purchased 20 share.
    Pls huid me.

    • Karthik Rangappa says:

      T1 means Trade day + 1. So it means the previous day you bought 20 share of the scrip, delivery due to you on T+2.

  105. Shubham wadewale says:

    t means traded quantity
    if means your dmat account has not received it.
    So if you trade this means you might do margine trade and you zerodha will charge you for that.
    this may not be correct. but currently i think this so

  106. Abdul says:

    1. why shorting is not allowed in CNC or regular order …why only in MIS .?
    2 . can we can short for longer term in FNO ?

    • Karthik Rangappa says:

      CNC is basically credit or debit from your DEMAT. If you dont have shares in your DEMAT, then you cannot sell from CNC. Yes, you can short upto 3 months on CNC and keep rolling that over.

  107. Aditya says:

    Hi Karthik

    Need help on concept of Shorting, the below sentence from the above paragraph is pretty confusing.

    “When you first sell, you are essentially borrowing it from someone else in the market, and when you buy it back, you actually return the shares back”

    Could you please make a block diagram or a simple flowchart on how this shorting works , that would be easier for me and some other guys to understand.

    Thanks and regards

  108. Aditya says:

    At the time of short position should we mention the number of days when we are buying back,?

  109. Abdul says:

    I know how to buy or sell in equity CNC. Little doubt in MIS.
    1) can we buy when ders no sellers similarly can we short when ders no buyers?
    2) In zerodha margin calculator i want to check margin of bank nifty and nifty futures . In which section i need to go coz I am getting confused der.
    thank u

  110. unknown says:

    does position mean the duration of holding the stocks?

    • Karthik Rangappa says:

      Position means the open active trading positions you have in the market. if you have bought 10 shares intraday, then you have 1 position i.e. long 10 shares.

  111. jas says:


    i am having problem in trading view on zeroadha. when ever i change the colour to white background it is not saved . when i open a new chart it goes back to the default settings. there is no option of save as default in zerodha trading view in settings.

    please help

  112. Aditya says:

    can we buy back the shares anytime in short position? Or Is there any maximum number of days within which we should buy it?

  113. Himanshu Joshi says:

    Hello KARTHIK SIR ,
    I can’t understand the definition of Face value specifically that 63 dividend, 5 face value and 1260%s (what is this)
    kindly elobrate it please sir….

    • Karthik Rangappa says:

      You are getting a dividend of 63/- on a stock which carries a face value of 5, hence you get a 1260% dividend.

      = 63/5
      =12.6 or 1260%

  114. Balbir says:

    I have shorted 5 shares of axis bank through MIS option. What is the process to buy it i.e. to close the transaction & book profit.

  115. Shubham says:

    Hi team,
    Assuming the trend is negative for any reason, what will happen if everyone shorts a particular share? Another question is why don’t everyone short if they know the trend is negative?

    • Karthik Rangappa says:

      The price will hit a lower circuit. Markets are made of different opinions, not everyone thinks the same way 🙂

  116. SAKTHIKUMAR Rangaiyan says:

    Say a particular stock price is ₹106 in NSE and ₹110 in BSE, can I short 1000 shares in BSE and buy 1000 shares in NSE in inra-day trade and square off the position?

  117. SAKTHIKUMAR Rangaiyan says:

    During intra-day long position, if I am convinced of long term bullishness and retain 100 shares on delivery basis there are 2 options. 1. If I bought 1000 shares, selling only 900 at the time of square off. 2.Sqaring off 1000 shares and initiating a fresh CNC buy of 100 shares.

  118. Sai Sudheer says:

    Hi Sir,

    As Volume is total no. of shares bought and sold both put together, how could it be possible to have an odd number for Volume…?
    Because fractional shares cannot be bought/sold isn’t it ?

    “Volumes represent the total transactions (both buy and sell put together) for a particular stock on a particular day. For example, on 17th June 2014, the volume on ACC was 5, 33,819 shares.”


    • Karthik Rangappa says:

      Hey, I just realised that the exchange reports just one-way volume, so if I buy 11 shares and sell 11 shares, volume reported is 11 and not 22.

  119. ishan says:

    hello karthik i just wanted to clear up a doubt when u said ” A market segment is a division within which a certain type of financial instrument is traded” were the financial instruments corporate bonds etc or something not discussed here?


    kartik on 15th may my opening cash balance was 13240,i sold 100 shares of hindlvr 202880 and in selling asian paints i earned 504 accordingly on 16th may my opening balance should 216624/- while at the site its showing 216143.33/- which is less by 481/- can you [please provide me the break up of this 481.Am i paying this amount as charges or anything else. No one from your office is available on phone i this lock down since many days. Will appreciate if you let me know.



  121. Varun Agrawal says:


    Is there a difference between “covering position” vs “squaring off”?

    The only way I can think of closing my position is to buy in case of short selling or vice-versa. Are there any other ways to cover my position without squaring off?

  122. Dheeraj Raju Jaisinghani says:

    In regards to Sakthikumar’s query on 9 th May, 2020 in this comment section, He asked the following

    ‘Say a particular stock price is ₹106 in NSE and ₹110 in BSE, can I short 1000 shares in BSE and buy 1000 shares in NSE in inra-day trade and square off the position?’

    to which you agreed to.
    Isn’t trading between exchanges disallowed on the same day?

    Because i remember you mentioned if someone is buying shares from one exchange and wants to sell it on another exchange, He can’t do that on the same day.
    in terms of long position, you had mentioned one can buy shares from one exchange and sell in other exchange.

    • Karthik Rangappa says:

      No, in fact, this is a popular arbitrage strategy. This position should be an intraday trade. Cannot carry it forward to the next day.

  123. Dheeraj says:

    Also, please ignore the last line.

  124. Vaibhav says:


  125. Bharat Agarwal says:

    Can i do a short delivery where i hold the trade for a few days?

  126. abhik says:

    Hi Karthik,
    What do we mean by 1st leg and 2nd leg when we talk about long and short position?

    • Karthik Rangappa says:

      These legs come into picture when you have multiple positions for a trade. For example long future and short put. Here long future is the first leg, short put is the 2nd.

  127. abhik says:

    Hi Karthik,
    I would request if u could provide a bit more detailed explanation on the same.

  128. Keerthi says:

    Is Outstanding shares means it includes shares of promoters,angel investors and VC , PE and shares issued during IPO..?

  129. venugopal says:

    Refering Volume: For example, on 17th June 2014, the volume on ACC was 5, 33,819 shares.
    If it is ‘both buy and sell put together’ , can there be a chance for the volume to be odd number.

  130. venugopal says:

    Sorry, its already answered. Thank u

  131. Harpreet says:

    Where in NSE can I check the upper and lower circuit of individual stocks? I know one can check it from the trading app, but I am curious to know how to find it from the NSE website.
    Thanks in advance 🙂

    • Karthik Rangappa says:

      NSE has changed the website, I’m really not sure where they are displaying this info. Need to dig around a bit.

  132. Srini says:

    I think that Shorting will do for intraday only . is it possible to shorting long time period?
    If it is possible to do, then how much time will be, please explain it.

  133. Rahul Jha says:

    That’s exactly what I was looking for.
    I skipped that and went directly to Candlesticks.
    Thank u..

  134. Rahul Jha says:

    Can comment section be integrated to Varsity Android app…

  135. Senthil Kumaran says:

    Is short option is available for holding position?
    For example i sell Asian paints at 1607rs and after a day or week can i buy back at 1585rs?

  136. Riya says:

    This is an absolutely brilliant blog for beginners! I have been looking for the right content over the past year until i found this. Thankyou so much^_^

  137. Lohitha says:

    Hi Karthik,
    Thanks for the detailed explanation. It’s very helpful.
    I have one doubt on upper circuit and lower circuit. In most of the companies if stock hits lower circuit, then it freezes at this price for the day. However I observed wherein few companies stock price goes below the LC price. Is UC/LC concept applicable only to few companies?

    • Karthik Rangappa says:

      A company’s share price cannot go below the LC. Circuit concepts are applicable to most of the stocks.

  138. Trideb says:

    Does EXIT (any time during the trade period is on(i.e, before 3.20 pm) option on KITE app means squaring off my position or it means I am selling my stocks at the LTP?

  139. Vivek Kaplingat says:

    “Many people believe that if a stock reaches 52 week high, then it indicates a bullish trend for the foreseeable future. Similarly, if a stock hits 52 week low, some traders believe that it indicates a bearish trend for a foreseeable future.”

    When the value of a stock reaches its highest, then isn’t it more reasonable to assume that it has a high chance of falling down? So, shouldn’t it indicate a bearish trend for the forseeable future? Same doubt for 52 week low, as well.

    Thanks again.

    • Karthik Rangappa says:

      Yes, that is also a valid thought. People call it the contrarian view. Usually, when a stock hits 52week high, you expect the momentum to continue. It is like you hit full throttle on a highway, you want to drive at that speed for a little longer before you cut the speed.

  140. Vivek Kaplingat says:


    1. Let’s say, the price of a share fell down from Rs.1000 to Rs. 200 on the first day of lockdown. That is a 80% drop, larger than the lower circuit of 20% (which is the max limit, I’m presuming, prescribed by the exchange). So, why is the threshold needed in the first place? Is the COVID situation a special exemption for such a drop in one day?

    2. Also, is the loss from shorting stocks limited to the price band/upper circuit? Can the loss exceed 20% (which is the max, right?) set by the upper circuit? I agree that 20% is still very high a loss to incur. Same doubt for lower circuit, as well.

    Thank you for your time.

    • Karthik Rangappa says:

      1) Not all shares have the same circuit. Few stocks dont have circuit also
      2) If the stocks has upper 20%, then yes that is the restriction. But if you have shorted futures and the stock hits 20%, then your account will be deep red.

  141. Yogita says:

    Small doubt, if we are long on a stock that means we are bullish and believe that stock prices will rise in future. So why in case of squaring off if we are long on a stock the position means to sell the stock?

  142. Pradeep says:

    You have the patience of a saint, Karthik, responding not just to queries but strange accusations haha. Also, I love the way you have put all of this together. More people really need to know about Zerodha Varsity.

  143. ADITYA says:

    hi, I am very new to all this and am writing this after completing this module.
    In the 15th chapter you mentioned, support price and resistance. I am not aware of these terms and did not find it here as well.
    please include these as well in this chapter.

  144. Prateek Somani says:

    In the short position example that you gave how can we borrow shares from someone else ? I don’t think there exist any body which allow you to borrow shares just like the bonds. And actually when you sell the shares , the shares will be transferred from your DEMAT account, then how could is it possible to trade from an empty DEMAT account ?

    • Karthik Rangappa says:

      The equity short trades are on an intraday basis. The clearing and settlement process allows you to do this.

  145. Amol says:

    Dear Karthik,
    Is the pull of shares same for BSE and NSE or is it separate? For example a company has 100 shares in secondary market. Out of which 50 on BSE and 50 on NSE or all 100 shares traded on both BSE and NSE randomly at same time?
    Another similar question. Are shares dealt in delivery for long term, intraday trades, Futures and Options from same pull ? Is the share bought by me can be from the seller who sold it in intraday trade or trade in Futures and Options?
    Thank you

    • Karthik Rangappa says:

      I can buy 100 shares on NSE, but while selling, I can choose to sell on BSE. So the dynamics keep changing. But having said that, NSE has higher liquidity in the market. These are two different segments i.e. derivatives and CNC. So it won’t be mixed up, besides in F&O, it is just the contract which gets trades and not the actual shares.

  146. Amol says:

    Thank you for your quick reply

  147. Mani.S says:

    Explaining the term ‘Volume’, it is aid that “”Volumes represent the total transactions (both buy and sell put together) for a particular stock on a particular day.”” I think that for every transaction there must be a buyer AND a seller. So, it is not clear to me what exactly you mean by ‘both buy and sell put together’. If 100 shares are sold by some one, obviously bought by some one else, the Volume is 100, right ?, not 200. unless I am missing something here. pls clarify. thanks

  148. Reyansh says:

    I wanted to ask that what if I short a stock and it breaks the lower circuit? Because shorting is permitted only on an intraday basis, how will be I able to buy the stock back as trading will not be permitted for the stock on that day right? Will I make profit or will I have to pay penalties? And what if the stock breaks the upper circuit?

  149. sudipta says:

    When a stock hits upper circuit, trading for that stock is halted for the day. gland pharma touched upper circuit today on 23rd nov at 10:25 am and trading halted. Then why gland pharma started trading again at 13.45 ?

  150. sudipta says:

    yes. it issued ipo recently. But my confusion is, lots of stocks don’t trade again for the day after hitting upper/lower circuit unlike gland pharma? like future retail. Why this dichotomy?

  151. Alister Fernandez says:

    Is it possible to get high and low Values for a particular period

  152. Manan Bohra says:

    Can We Do Shortselling In 2020? If Yes, How can We Do that

  153. Narayanan nambudiri says:

    Can shorting be done only intraday? Or can I short it today and buy it after 4 days when the price falls?

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