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Finance GlossaryBond Market
Bond Market
Definition of Bond Market
A bond market is a place where bonds are issued, bought, and sold. Bonds are issued in exchange for a loan generally by governments and corporations.
Related Terms
Indices
Indices are a collection of financial instruments that measure the performance of those very instruments.
For example, stock market indices like Nifty 50 and Sensex measure the top 50 and 30 stocks by market capitalization.
If indices go up, it generally means that the underlying stocks are performing well. The opposite is true when indices plummet.
By the way, there’s no limit to how many instruments an index can track. The Nifty Smallcap 250 tracks 250 stocks whereas Nifty Bank tracks 12 stocks.
For example, stock market indices like Nifty 50 and Sensex measure the top 50 and 30 stocks by market capitalization.
If indices go up, it generally means that the underlying stocks are performing well. The opposite is true when indices plummet.
By the way, there’s no limit to how many instruments an index can track. The Nifty Smallcap 250 tracks 250 stocks whereas Nifty Bank tracks 12 stocks.
Overbought
An overbought term refers to a security whose price has advanced sharply, and the broader market sentiment suggests that a price correction or reversal is likely to occur in the near future. It does not necessarily mean the price will go down, but that the upward momentum is unsustainable. Technical indicators such as the Relative Strength Index (RSI) or Stochastic Oscillator are widely used by traders for identifying overbought situations. An RSI above 70 is considered an overbought indicator.
Range Bound
Range Bound refers to a market or stock price that fluctuates within a defined horizontal channel, between clear support and resistance levels, without establishing a strong trend. Prices oscillate as buying pressure at the lower bound meets selling at the upper bound, indicating indecision among investors. This condition suits range-trading strategies using oscillators like RSI, but breakouts can signal trend changes.
Opening Range
The Opening Range is the range of trading prices (from the highest point to the lowest point) of a security in the initial period, after the market opening. In the Indian stock market (NSE and BSE), the opening period is defined as the first 15 - 30 minutes of trading. Traders, especially day traders, pay close attention to the opening range because it often sets the tone for the rest of the trading day and offers potential support and resistance levels.
Deferred Tax
The term deferred tax in a financial statement is used to refer to future tax payments in the case of temporary differences, a situation where an asset or liability on the balance sheet is realised but is taxable in the future.
Common examples of deferred tax include line items such as employee bonus or PF contributions, depreciation of fixed assets, net losses, and others.
Common examples of deferred tax include line items such as employee bonus or PF contributions, depreciation of fixed assets, net losses, and others.
Margin Funding
Margin funding is a feature offered by brokers that allows users to borrow funds from the broker to increase purchasing power for trading or investing in financial markets. Margin funding is effectively a loan and as a result, there’s collateral to be pledged in the form of shares either already owned to about to be bought. Thus, margin funding amplifies profit and loss.
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