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Market Basics & Instruments

Intraday Trading

Buying and selling the same security within a single trading session so that no position is carried overnight.

Test: the position is opened and closed within the same trading day, leaving a net quantity of zero at the close qualitative Fundamental Analysis & Valuation

Intrinsic Value

The value of a business justified by the cash it can be expected to produce over its life, discounted to today.

Intrinsic Value = Sum of Future Free Cash Flows discounted at the required rate of return ₹ Financial Statements & Accounting

Inventory

Goods held for sale, work in progress, and raw materials, carried at the lower of cost and net realisable value.

Inventory Days = Average Inventory / Cost of Goods Sold x 365 ₹ crore Fundamental Analysis & Valuation

Inventory Turnover Ratio

Cost of goods sold divided by average inventory, showing how many times stock is sold and replaced in a year.

Inventory Turnover = Cost of Goods Sold / Average Inventory; Inventory Days = 365 / Inventory Turnover ratio (x, times) Technical Analysis & Chart Patterns

Inverse Head and Shoulders

A formation of three troughs in which the middle trough is the lowest and the outer two are roughly level, joined by a neckline through the…

Neckline = line through the two highs between the troughs; conventional measured move = Head Depth below Neckline, projected up from the break qualitative Technical Analysis & Chart Patterns

Inverted Hammer

A candlestick with a small body near the bottom of its range and a long upper wick, appearing after a decline.

Test: Upper Wick is at least twice the Body, Lower Wick is minimal, and the candle follows a decline qualitative Bonds & Fixed Income

Inverted Yield Curve

A yield curve on which short-maturity yields exceed long-maturity yields.

Test: yield on a short maturity, such as two years, exceeds the yield on a longer one, such as ten years % Financial Statements & Accounting

Investing Cash Flow

The net cash used in or generated by buying and selling long-term assets and investments during a period.

Investing Cash Flow = Proceeds from Asset Sales + Investment Income - Capital Expenditure - Acquisitions - Investments Made ₹ crore Indian Market, Regulation & Taxation

Investment Adviser

A SEBI-registered professional who advises on securities for a fee and owes a fiduciary duty to the client.

Test: the person holds a SEBI registration as an investment adviser and charges a fee for advice rather than earning commission on products qualitative Bonds & Fixed Income

Investment Grade

A credit rating of BBB minus or above, indicating relatively low expected default risk.

Test: the rating is BBB- or higher on the standard scale qualitative Market Basics & Instruments

Investor

A market participant who buys securities for their expected long-term cash flows and business performance rather than for short-term price…

Test: the holding decision rests on the underlying business or issuer's economics, with a horizon measured in years qualitative Indian Market, Regulation & Taxation

Investor Protection Fund

A fund maintained by each exchange to compensate investors for losses arising from a defaulting trading member.

Test: the claim arises from a declared default of a trading member and falls within the compensation limit set by the exchange ₹ Indian Market, Regulation & Taxation

IPO Allotment

The process of distributing shares among applicants when an issue is subscribed, by lottery in the oversubscribed retail portion.

Test: in an oversubscribed retail portion, allotment is by lottery in minimum lots, so each application has an equal chance regardless of size qualitative Derivatives, Futures & Options

Iron Condor

A four-leg position writing an out-of-the-money call and put while buying further out-of-the-money protection on both sides.

Net Credit = Premiums Received - Premiums Paid; Maximum Loss = (Width of the Wider Wing - Net Credit) x Lot Size ₹ Market Basics & Instruments

ISIN

The twelve-character International Securities Identification Number that uniquely identifies a security worldwide.

ISIN = 2-letter country code + 9-character national identifier + 1 check digit (12 characters total) qualitative Technical Analysis & Chart Patterns

Island Reversal

A cluster of periods isolated on both sides by gaps in opposite directions, leaving it detached from the surrounding chart.

Test: a gap in one direction, one or more periods of trading, then a gap back in the opposite direction, with the two gaps overlapping in price qualitative Risk & Portfolio Management

Kelly Criterion

A formula giving the position size that maximises the long-run growth rate of capital.

Optimal Fraction = (Win Probability x Payoff Ratio - Loss Probability) / Payoff Ratio % Indicators & Oscillators

Keltner Channel

Bands plotted a multiple of average true range above and below an exponential moving average of price.

Middle Line = 20-period EMA; Upper Channel = Middle + 2 x ATR; Lower Channel = Middle - 2 x ATR ₹ Indian Market, Regulation & Taxation

KYC

The know-your-customer process of verifying an investor's identity, address and financial details before market access is granted.

Test: identity, address and PAN are verified against prescribed documents and recorded with a KYC registration agency qualitative Bonds & Fixed Income

Laddering

Holding bonds with staggered maturities so that a portion matures each year.

Test: the portfolio is divided across n maturity rungs, with roughly equal amounts maturing in each successive period qualitative Indicators & Oscillators

Lagging Indicator

An indicator that confirms a move after it is under way, typically built by smoothing price over a lookback window.

Test: the indicator averages or smooths past values, so its turning point necessarily follows price's own qualitative Market Basics & Instruments

Large-Cap Stock

A share of one of the largest listed companies by market capitalisation — in India, one of the top 100 under SEBI's classification.

Rank all listed companies by average market capitalisation; ranks 1 to 100 are large-cap qualitative Market Basics & Instruments

Last Traded Price

The price at which the most recent trade in a security was executed on the exchange.

LTP = execution price of the most recent trade, regardless of its size ₹ Orders, Execution & Market Structure

Latency

The time elapsed between sending an instruction and its effect being registered by the exchange.

Round-Trip Latency = time from order transmission to receipt of the exchange's acknowledgement qualitative