Hello readers, we are happy to announce that our team of MoneyWiseMind.com launched a new section “Investing Insights: Weekly Q&A for Stock Market Newbies”, to spread the basic stock market knowledge to the beginners.
This is your go-to resource for demystifying the stock market from the scratch. Each day, we will present 10 carefully curated questions with answers that will cover essential concepts, strategies, and terminologies. Whether you have just entered into the market, or trying to starting your stock market journey, or looking to strengthen your foundation, our weekly post will guide you through the basics and beyond, making investing accessible and understandable for everyone. Happy reading.
Day 63: Basic Stock Market Concept
What is a REIT (Real
Estate Investment Trust)?
A REIT is an investment vehicle that owns,
operates, or finances income-producing real estate. Instead of buying property
directly, investors can buy units/shares of a REIT, which pools money to invest
in offices, malls, warehouses, etc. The rent or lease income is distributed
(after expenses) to unit-holders as dividends. In India, REITs must be listed
and regulated by SEBI.
What does
“Underweight” mean in Investing?
“Underweight” has two common meanings:
As a portfolio decision, it means
holding less of a particular asset (stock, sector) compared to its weight in a
benchmark index.
As an analyst’s rating, it suggests
that the analyst expects the stock to underperform relative to peers or index,
so recommends reducing exposure.
What is the Cash
Reserve Ratio (CRR)?
CRR is the percentage of deposits that banks must
hold in cash (or with the central bank) and cannot lend out. It is a tool used
by the central bank to manage liquidity in the banking system. Reducing CRR
frees up more funds for banks to lend; increasing it restricts lending.
What is the Monetary
Policy Committee (MPC)?
In India, the MPC is a committee of members
(appointed by RBI and government) that decides key policy interest rates (like
the repo rate) to control inflation and support growth. They meet periodically
(e.g. every two months) and assess economic conditions (inflation, growth)
before setting rates.
What is the Production
Linked Scheme (PLI)?
PLI is a government scheme that gives financial
incentives to manufacturers to increase production in certain sectors
(electronics, pharmaceuticals, etc.). The idea is to promote domestic
manufacturing by rewarding value addition and export performance.
What is a Standalone
Financial Statement?
A standalone financial statement reflects the
financials of a single entity (company) alone—its income, expenses, assets,
liabilities—without combining with subsidiaries or group companies. It shows
how that company itself is doing.
What is a New
Fund Offer (NFO)?
NFO is the initial launch of a new mutual fund
scheme. During NFO, investors can subscribe to units at a fixed price (often
₹10 per unit). After the NFO period ends, the scheme starts its regular
operations, and its units then trade at market NAV.
What is Capital
Gains Tax?
Capital gains tax is levied on profits earned when
an asset (e.g. shares, property, and mutual fund units) is sold for more than
its purchase price. India distinguishes between short-term and long-term capital
gains, applying different tax rates depending on how long the asset was held.
What does a Fund
Manager do?
A fund manager runs an investment fund (mutual
fund, hedge fund, etc.). Their responsibilities include selecting which assets
to buy/sell, deciding allocation across sectors, monitoring risk, aiming to
meet the fund’s investment goals, and keeping costs in check.
What is a Contract
Note and what does it include?
A contract note is a legal document issued by a
broker to the investor after trades are executed. It lists details of the
trade(s)—buy/sell, quantity, price, brokerage, taxes, timestamps. It acts as
proof of your trades and is essential for tax filing, dispute resolution, and
audit.
if you have any other questions in your mind relating to stock market basics or need any clarification, please put your query into the comment box, We will try our best to clarify the same
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
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