"The stock market is a device for transferring money from the impatient to the patient." – Warren Buffett
In Bangladesh, the capital market often feels like a secret club. Outsiders hear mixed stories — tales of people who bought Grameenphone during its 2009 IPO and made a fortune, and tales of heartbreak from the 2011 crash when life savings were wiped out in months.
The truth? It’s neither magic nor pure gambling. It’s a marketplace — just like Gawsia or New Market — except here, people are buying and selling ownership in companies. And just like bargaining in a bazaar, if you don’t know the language, you’ll get lost… or worse, lose money.
So today, let’s walk together through the streets of stock market, sip some tea with the old traders and investors, and learn the 19 fundamental terms that will help you speak the language of investing.
1. Capital Market – The Big Bazaar of Finance
The capital market is where money meets opportunity. In Bangladesh, it has two main parts:
Primary Market:
Companies raise money by selling new shares or bonds to the public for the first time.
Example: Robi Axiata Ltd. made its much-anticipated debut on the Dhaka and Chittagong Stock Exchanges on December 24, 2020, raising approximately Tk 523 crore by issuing 52.37 crore new shares at Tk 10 each.
Money here goes directly to the company for projects, expansion, or debt repayment.
Secondary Market:
Investors trade shares with each other — this is where most buying and selling happens daily on the Dhaka Stock Exchange (DSE) or Chittagong Stock Exchange (CSE).
Example: You buy Square Pharmaceuticals shares from another investor, not from Square itself.
Think of it like: Primary is a brand-new store’s grand opening; Secondary is a bustling resale market.
2. Stock / Share – Your Slice of the Pie
A share is a unit of ownership in a company. If a company has 10 crore shares and you own 10,000, you own 0.1% of it.
Example: Square Pharmaceuticals has approximately 88.65 crore shares outstanding.
Owning 88,650 shares means you would hold about 0.1% ownership in Bangladesh’s largest pharmaceutical company.
Owning shares means:
· You may receive dividends if the company shares its profits.
· Your shares’ value will rise or fall based on performance and market sentiment.
3. Bond – Playing Banker
When you buy a bond, you’re lending money to the government or a company in exchange for regular interest payments and repayment at maturity.
Example:
· Bangladesh Government Treasury Bond, 5-year term, interest rate: 11.07% (as of 2025).
· Invest Tk 1,00,000 → earn Tk 11,070 per year for 5 years → get Tk 1,00,000 back at the end.
Bonds are generally less risky than stocks, but returns are usually lower.
4. IPO (Initial Public Offering) – The Grand Opening
An IPO is when a company sells shares to the public for the first time.
Example: Grameenphone IPO in 2009 at Tk 70 per share. Demand was so high that a lottery system was used.
Within months of listing, prices crossed Tk 300 — early investors made big profits.
But not all IPOs succeed. Always read the company’s prospectus before applying.
5. Market Capitalization – The Company’s Weight Class
Market cap = Share Price × Number of Shares.
Example: Square Pharma price: Tk 226
Shares: 88.65 crore
Market cap = Tk 226 × 88.65 crore = Tk 20,034.9 crore
Large-cap companies are typically more stable; small-cap stocks can be riskier but may grow faster.
6. P/E Ratio – The Price Tag on Earnings
P/E Ratio = Share Price ÷ Earnings Per Share (EPS).
Example: Square Pharma’s EPS: Tk 23.61
Price: Tk 226
P/E = 226 ÷ 23.61 = 9.57
A high P/E may mean investors expect strong growth; a low P/E could signal undervaluation or trouble. Always compare with industry peers.
Also, a very high P/E compared to the industry average may suggest that the share price has become overheated and could be due for a correction soon.
7. EPS (Earnings Per Share) – Profit Per Slice
EPS = Net Profit ÷ Total Shares.
Example:
Net profit: Tk 1,833 crore
Shares: 88.65 crore
EPS = 1,833 ÷ 88.65 = Tk 20.68
Rising EPS over time is generally a healthy sign.
8. NAV (Net Asset Value) – What’s It Really Worth?
NAV = (Total Assets – Total Liabilities) ÷ Number of Shares.
Example:
Company assets: Tk 1,000 crore
Liabilities: Tk 400 crore
Shares: 10 crore
NAV = (1,000 – 400) ÷ 10 crore = Tk 60 per share
NAV is crucial for mutual funds and also tells you what each share would be worth if the company sold everything and paid off its debts.
9. Dividend & Dividend Yield – Your Payback
Dividend = The company’s way of sharing profits with shareholders. In Bangladesh, dividends can be:
· Cash Dividend: Money directly to your bank account.
· Stock Dividend (Bonus Shares): Additional shares instead of cash.
Example:
A company declares a 20% cash dividend → Tk 2 per share if the face value is Tk 10.
A 10% stock dividend → you get 1 extra share for every 10 shares you own.
Dividend Yield = (Annual Dividend ÷ Share Price) × 100%.
Example:
Company pays Tk 15 per share in cash dividends.
Price: Tk 240
Yield = (15 ÷ 240) × 100% = 6.25%
This tells you how much income your investment generates annually from dividends — separate from share price growth.
10. Technical Analysis – Reading the Market’s Mood
Technical analysis is like reading the stock market’s body language — studying charts, trends, and patterns to anticipate price moves.
Example: BRAC Bank – A trader might observe that BRAC Bank’s 50-day moving average is around Tk 51.57, while the current price is Tk 69.80. This signals strong upward momentum. However, the RSI (Relative Strength Index) at 87.95 suggests the stock might be overbought, meaning a short-term pullback is possible.
11. Fundamental Analysis – Checking the Company’s Health
Fundamental analysis examines a company’s financial health, industry position, and growth prospects to find its intrinsic value.
Example: City General Insurance – NAV per share: Tk 21.15, EPS: Tk 3.08, total shares ~6.82 crore. If the market price is Tk 55.20, comparing it to NAV and EPS helps investors judge whether it’s fairly priced or overvalued.
12. Volume Analysis – Following the Money Flow
Volume shows how much trading activity a stock has, revealing where money is flowing. Comparing daily volume with the 15-day or 30-day average can indicate the strength of a move.
Example: BRAC Bank – 30-day average volume ~3.61 million shares, but today’s volume is 2.4 million. This suggests activity is lower than usual — a trader might wait for a spike above the average to confirm strong buying interest.
13. Bull Market & Bear Market – Market Moods
Bull Market: Prices rise for months/years; optimism rules. Example: DSE 2007–2009 rally.
Bear Market: Prices fall sharply; fear dominates. Example: Post-2010 crash.
14. Blue-Chip Stocks – The Market’s Royalty
Large, financially sound companies with reliable performance.
Examples: Grameenphone, BATBC, Square Pharma. They’re less volatile and good for long-term holding.
15. Limit Order & Market Order – Controlling Your Entry
Limit Order: Set the exact price to buy/sell.
Market Order: Buy/sell immediately at the best available price.
16. Portfolio Diversification – Don’t Bet on One Horse
Mixing sectors and asset types reduces risk.
Example: Tk 5 lakh portfolio:
· Tk 1.5 lakh in pharma
· Tk 1 lakh in telecom
· Tk 1 lakh in banks
· Tk 50,000 in textiles
· Tk 1 lakh in bonds
17. Liquidity – Can You Sell Quickly?
High-liquidity stocks (high trading volume) can be sold instantly at market price. Low-liquidity stocks might need price cuts to find buyers.
18. Volatility – The Roller Coaster Factor
Some shares barely move; others swing wildly 10% in a day. Small-cap stocks in textiles often show high volatility.
19. Circuit Breaker – The Market’s Safety Switch
To prevent chaos, DSE limits daily price movement to ±10% for most shares.
Example:
· If GP closes at Tk 300 today, tomorrow’s range is Tk 270 to Tk 330.
· This keeps rumors or sudden panic from destroying investor confidence overnight.
Final Thoughts – Learn Before You Earn
The capital market can change lives — but only if you understand it. As an old trader once told me over tea:
"In this game, your brain is your biggest capital. The market respects knowledge more than money."
Learn the terms, watch the numbers, and invest with patience. Because in the market, knowledge is profit.
