PSX terms, translated into plain language.
Answer-ready definitions for the terms Pakistani investors see in portfolios, announcements, reports, and market conversations.
Basic terms
Core PSX words you see in quotes, dividend announcements, trading screens, and portfolio summaries.
Balance sheet
The balance sheet is a snapshot of what a company owns and owes at a point in time.
Bear market
A bear market is a sustained period of falling prices, usually a drop of 20% or more from a high.
Behavioral bias
A behavioral bias is a systematic thinking error that leads to irrational investment decisions.
Bid-ask spread
The bid-ask spread is the gap between the highest price buyers offer and the lowest price sellers ask.
Blue-chip stock
A blue-chip is a large, established, financially sound company with a track record of stable performance.
Bond
A bond is a loan to a government or company that pays interest and repays the principal at maturity.
Bonus shares
Bonus shares are additional shares issued to existing shareholders without a cash payment. They increase the number of shares held, while the share price usually adjusts to reflect the larger share count.
Book closure
Book closure is the period when a company closes its shareholder register to determine who is eligible for a dividend, bonus, right share, or meeting vote.
Book value
Book value is the accounting value of a company's net assets. PSX investors often compare it with market price, especially for banks and asset-heavy businesses, but it does not capture every business strength or risk.
Brokerage fee
A brokerage fee is the cost charged by a broker when buying or selling shares. It reduces net returns and should be included when comparing portfolio performance.
Bull market
A bull market is a sustained period of rising stock prices and positive investor sentiment.
Capital gain tax
Capital gain tax is tax applied to gains from selling securities. Pakistani investors should verify current rules, rates, filer status, and holding-period treatment from official sources before calculating net returns.
Cash flow statement
The cash flow statement shows the actual cash moving in and out of a company over a period.
Central Depository Company (CDC)
The CDC is the institution that holds PSX shares electronically and records who owns them.
Circuit breaker
A circuit breaker is the maximum percentage a single stock's price can move up or down in one PSX session.
Compounding
Compounding is earning returns on your past returns, so growth accelerates over time.
Consumer Price Index (CPI)
The CPI measures the average change in prices of a basket of goods and services households buy.
Cost averaging
Cost averaging is investing a fixed amount regularly regardless of the price.
Disclosure
Disclosure is a company's duty to publicly share information that could affect its share price.
Diversification
Diversification is spreading money across different investments to reduce overall risk.
Dividend yield
Dividend yield shows annual dividend income as a percentage of the current share price. It helps PSX investors compare income from different stocks, but it should be reviewed with payout history, earnings quality, and whether the dividend is sustainable.
Drawdown
A drawdown is the drop from an investment's peak value to its lowest point before a new high.
Earnings per share
Earnings per share, or EPS, shows how much profit a company earned for each share. It is a common PSX valuation input, but investors should compare it with cash flow, margins, debt, and one-off gains.
Ex-dividend date
The ex-dividend date is the date from which new buyers are not entitled to the declared dividend. PSX investors watch this date to understand dividend eligibility and price adjustments around payouts.
Exchange-Traded Fund (ETF)
An ETF is a fund that trades on the stock exchange like a single share.
Face value
Face value, or par value, is the nominal value of a share set in the company's accounts.
Fear of missing out (FOMO)
FOMO is the urge to buy a rising stock just because others are profiting from it.
Filer vs non-filer
In Pakistan, a filer files income tax returns and pays lower withholding rates than a non-filer.
Final dividend
A final dividend is the payout declared with full-year results and approved by shareholders at the AGM.
Fundamental analysis
Fundamental analysis values a stock by studying the business, its financials, and its industry.
Income statement
The income statement shows a company's revenues, costs, and profit over a period.
Inflation
Inflation is the rate at which the general level of prices rises over time.
Initial Public Offering (IPO)
An IPO is the first sale of a company's shares to the public when it lists on the exchange.
Interim dividend
An interim dividend is a payout declared partway through the financial year, before annual results.
Limit order
A limit order sets the maximum price you will pay to buy or the minimum you will accept to sell.
Liquidity
Liquidity is how easily you can buy or sell a stock without moving its price much.
Listing
Listing is the process of getting a company's shares admitted for trading on the exchange.
Market capitalization
Market capitalization is the total market value of a listed company. It is calculated by multiplying share price by shares outstanding and helps investors compare company size.
Market order
A market order buys or sells immediately at the best available current price.
Market sentiment
Market sentiment is the overall mood of investors toward the market, ranging from fearful to greedy.
Mutual fund
A mutual fund pools money from many investors to buy a managed portfolio of assets.
Policy rate
The policy rate is the benchmark interest rate set by the State Bank of Pakistan.
Price band
A price band is the allowed range between the highest and lowest price a stock can trade at in a session.
Price return
Price return measures how much a share price has moved over a period, excluding dividends and other income. It is different from total return.
Primary market
The primary market is where new shares are first sold by a company to investors.
Purchasing power
Purchasing power is how much your money can actually buy.
Realized gain
A realized gain is profit from a position that has been sold. It matters for performance tracking and may affect tax calculations depending on rules, holding period, and investor status.
Record date
The record date is the cut-off day a company uses to decide who qualifies for a dividend or other action.
Remittances
Remittances are money sent home by Pakistanis working abroad.
Right shares
Right shares give existing shareholders the option to buy additional shares, usually at a set price and ratio. Investors should review the purpose, price, and dilution effect before deciding whether to subscribe.
Risk tolerance
Risk tolerance is how much loss and volatility you can handle financially and emotionally.
Rupee depreciation
Rupee depreciation is a fall in the value of the Pakistani rupee against foreign currencies.
Secondary market
The secondary market is where investors trade existing shares with each other after they are issued.
Sector index
A sector index tracks the combined performance of companies in one industry, such as banks or cement.
Securities and Exchange Commission of Pakistan (SECP)
The SECP is the regulator that oversees the PSX, listed companies, brokers, and funds.
Settlement cycle (T+1)
The settlement cycle is how long after a trade the shares and money actually change hands.
Share split
A share split divides each share into more shares with a lower face value, without changing total value.
Shares outstanding
Shares outstanding is the total number of a company's shares currently held by all investors.
Shariah-compliant stock
A Shariah-compliant stock passes Islamic screening on both its business and its finances.
State Bank of Pakistan (SBP)
The SBP is Pakistan's central bank, responsible for monetary policy and financial stability.
Stock dividend
A stock dividend pays shareholders in extra shares instead of cash.
Ticker symbol
A ticker symbol is the short code used to identify a listed company on the exchange.
Time horizon
Time horizon is how long you plan to keep money invested before you need it.
Total return
Total return is the full gain from an investment, including both price change and dividends.
Trading volume
Trading volume is the number of shares traded during a session or period. It helps investors judge liquidity and how much activity sits behind a price move.
Treasury bills (T-bills)
T-bills are short-term debt instruments issued by the Government of Pakistan, usually up to one year.
Unique Identification Number (UIN)
A UIN is the single ID number that links all your PSX brokerage accounts and trades.
Unrealized gain
An unrealized gain is a profit shown on a holding that has not been sold. It can change with market prices and only becomes realized after the investor sells the position.
Advanced concepts
Ratios and analytical concepts for reading financial reports, comparing sectors, and judging balance-sheet risk.
Accruals
Accruals are revenues and expenses recorded when they are earned or incurred, not when cash moves.
Anchoring
Anchoring is fixating on one reference number, like your purchase price, when making decisions.
Asset Management Company (AMC)
An AMC is a licensed firm that creates and manages mutual funds and other investment products.
Beta
Beta estimates how sensitive a stock has been to market moves. It is a historical risk measure, not a forecast of future performance.
Book-building
Book-building is a process where institutional investors bid to set the IPO price before the public offer.
Broker sub-account
A sub-account is a client account held within a broker's main CDC account at the depository.
Bull trap
A bull trap is a false rally that lures buyers in before the price resumes falling.
Cash-settled futures
Cash-settled futures settle in cash for the price difference, with no shares changing hands.
CDC Investor Account
A CDC Investor Account holds your shares directly with the CDC rather than inside a broker's pooled account.
Circuit filter
A circuit filter is the rule that caps how far a single stock can move in a day before locking.
Concentration risk
Concentration risk is the danger of having too much exposure to a single stock, sector, or theme.
Confirmation bias
Confirmation bias is seeking out information that supports what you already believe.
Contingent liability
A contingent liability is a possible future obligation that depends on an uncertain event.
Correlation
Correlation measures how closely two investments tend to move together.
Coupon rate
The coupon rate is the annual interest a bond pays, stated as a percentage of its face value.
Cum-dividend
Cum-dividend means a share is trading with the right to the upcoming declared dividend still attached.
Current account deficit
A current account deficit means a country spends more on imports and payments abroad than it earns.
Current ratio
Current ratio compares current assets with current liabilities. It gives a quick view of short-term liquidity, especially for working-capital-heavy businesses.
Day trading
Day trading is buying and selling the same stock within a single trading session.
Debt-to-equity ratio
Debt-to-equity ratio compares a company's borrowings with shareholder equity. It helps investors understand leverage and balance-sheet risk.
Delisting
Delisting is the removal of a company's shares from trading on the exchange.
Deliverable futures
Deliverable futures are PSX contracts where actual shares are delivered when the contract expires.
Dilution
Dilution is the drop in each existing share's ownership when a company issues new shares.
Discount rate
The discount rate converts future cash into today's value, reflecting time and risk.
Discounted cash flow (DCF)
DCF values a company by estimating its future cash flows and discounting them to today's value.
Disposition effect
The disposition effect is the habit of selling winners too soon and holding losers too long.
Dividend discount model
The dividend discount model values a stock as the present value of its expected future dividends.
Dividend policy
A dividend policy is a company's stated approach to how much profit it returns to shareholders.
Earnings quality
Earnings quality describes how reliably reported profit reflects real, repeatable cash generation.
Enterprise value
Enterprise value estimates the value of the whole business by combining market capitalization with net debt. It helps investors compare companies with different capital structures.
Equity risk premium
The equity risk premium is the extra return investors expect from stocks over the risk-free rate.
EV to EBITDA
EV to EBITDA compares enterprise value with operating earnings before interest, tax, depreciation, and amortization. It is often used for capital-intensive companies.
Expense ratio
The expense ratio is the annual fee a fund charges as a percentage of your invested amount.
Extraordinary General Meeting (EOGM)
An EOGM is a shareholder meeting called outside the normal AGM cycle to decide an urgent matter.
Fiscal deficit
A fiscal deficit is when a government spends more than it collects in revenue.
Foreign exchange reserves
Foreign exchange reserves are the foreign currency a country holds, managed by its central bank.
Forward P/E
Forward P/E divides the share price by expected future earnings per share rather than past earnings.
Free cash flow
Free cash flow is cash left after operating needs and capital spending. It helps investors judge whether profits are converting into cash that can reduce debt or fund dividends.
Free float
Free float is the portion of a listed company's shares that are available for public trading on the open market.
Free-float market capitalisation
Free-float market cap values only the shares available for public trading, not locked or strategic holdings.
Free-float percentage
Free-float percentage is the share of a company's stock available for public trading.
Futures contract
A futures contract is an agreement to buy or sell a security at a set price on a future date.
Goodwill
Goodwill is the premium a company pays to acquire another above the fair value of its net assets.
Gross margin
Gross margin is the percentage of revenue left after the direct cost of goods sold.
Growth investing
Growth investing focuses on companies expected to grow earnings faster than average.
IMF programme
An IMF programme is a loan and reform arrangement between Pakistan and the International Monetary Fund.
Impact cost
Impact cost is how much your own order moves the price against you because of limited liquidity.
Index divisor
The index divisor is a number used to convert total market value into the index level and keep it consistent over time.
Index rebalancing
Rebalancing is the periodic review where an index adds, drops, or re-weights its member companies.
Index weight
Index weight is the share of an index's value that a single company represents.
Insider trading
Insider trading is dealing in shares using important non-public information, and it is illegal.
Interest-rate risk
Interest-rate risk is the danger that rising rates reduce the value of an investment, especially bonds.
Interest-rate sensitivity
Interest-rate sensitivity is how much an investment's value reacts to changes in interest rates.
Intrinsic value
Intrinsic value is an estimate of what a company is truly worth based on its fundamentals.
KIBOR
KIBOR is the benchmark interest rate at which banks in Pakistan lend to each other.
KMI All Share Index
The KMI All Share Index covers every Shariah-compliant stock on the PSX, not just the most liquid 30.
KSE-30 Index
The KSE-30 tracks the 30 largest and most liquid PSX companies using a free-float methodology.
Leverage
Leverage is using borrowed money to increase the size of an investment position.
Loss aversion
Loss aversion is the tendency to feel losses more painfully than equivalent gains.
Lower lock
Lower lock is a market limit where a stock reaches its maximum allowed downward move for a session. It can indicate selling pressure, but investors still need source-backed context.
Margin call
A margin call is a demand to add funds when your leveraged position loses value past a limit.
Margin financing
Margin financing lets you buy shares using borrowed money, putting up only part of the value yourself.
Margin of safety
Margin of safety is the gap between a stock's estimated intrinsic value and a lower price you pay.
Market breadth
Market breadth measures how many stocks are rising versus falling, beyond just the index level.
Market halt
A market halt is a temporary, exchange-wide pause in trading triggered by a large index move.
Market timing
Market timing is trying to buy and sell based on predicting short-term market moves.
Material information
Material information is any fact that could reasonably influence a stock's price or an investor's decision.
Maximum drawdown
Maximum drawdown is the largest peak-to-trough fall an investment has experienced over a period.
Minority shareholder
A minority shareholder owns a small, non-controlling stake in a company.
Moving average
A moving average smooths a stock's price over a chosen period to reveal its trend.
NCCPL
The NCCPL is the company that clears and settles PSX trades and manages capital gains tax collection.
Net margin
Net margin is the percentage of revenue that becomes final net profit after all costs.
Nominal return
Nominal return is your investment return before adjusting for inflation.
Odd lot
An odd lot is a quantity of shares smaller than the standard trading lot.
Operating margin
Operating margin is the percentage of revenue left after operating costs but before interest and tax.
Overconfidence bias
Overconfidence bias is overestimating your own knowledge or ability to predict markets.
Pakistan Investment Bonds (PIBs)
PIBs are longer-term government bonds issued by Pakistan, typically 3 to 30 years.
Payout ratio
Payout ratio shows how much of a company's earnings are distributed as dividends. It helps investors assess whether the dividend appears conservative or stretched.
PEG ratio
The PEG ratio divides the P/E ratio by the company's earnings growth rate.
Penny stock
A penny stock is a very low-priced share, often of a small or troubled company.
Portfolio rebalancing
Rebalancing is realigning your portfolio back to its target mix after prices drift it off course.
Price-to-book ratio
Price-to-book ratio compares a company's market price with its book value per share. It is often used for banks, insurers, and asset-heavy PSX companies.
Price-to-earnings ratio
The price-to-earnings ratio compares a company's share price with its earnings per share. It is a valuation shortcut, not a complete investment case, and should be compared within the same sector.
Price-to-sales ratio
The price-to-sales ratio compares a company's market value to its revenue.
Proxy voting
Proxy voting lets a shareholder authorise someone else to vote their shares at a company meeting.
Real Estate Investment Trust (REIT)
A REIT is a listed vehicle that owns or develops real estate and passes income to unit holders.
Real return
Real return is your investment return after subtracting inflation.
Related-party transaction
A related-party transaction is a deal between a company and a connected party, such as its owners or affiliates.
Relative Strength Index (RSI)
RSI is a momentum indicator that gauges whether a stock may be overbought or oversold.
Retained earnings
Retained earnings are the cumulative profits a company keeps rather than paying out as dividends.
Return on assets (ROA)
ROA shows how much profit a company generates from its total assets.
Return on equity
Return on equity, or ROE, shows how much profit a company generates compared with shareholder equity. It is a profitability ratio, not a guarantee of future returns.
Reverse split
A reverse split combines several shares into one, raising the price per share without changing total value.
Risk-free rate
The risk-free rate is the return on an investment considered to have virtually no default risk.
Rollover week
Rollover week is the period when expiring futures positions are closed or moved to the next contract.
Secondary offering
A secondary offering is a sale of additional shares by a company or large holder after the IPO.
Sector rotation
Sector rotation is the shift of money from one industry to another as conditions change.
Securities Lending and Borrowing (SLB)
SLB is a regulated system that lets investors lend out or borrow shares for a fee.
Sensitive Price Index (SPI)
The SPI is a weekly Pakistani index tracking prices of essential everyday items.
Share buyback
A buyback is when a company repurchases its own shares from the market, reducing shares outstanding.
Sharpe ratio
The Sharpe ratio measures return earned per unit of risk taken.
Short selling
Short selling is selling borrowed shares hoping to buy them back cheaper for a profit.
Slippage
Slippage is the difference between the price you expected and the price your order actually filled at.
Small-cap stock
A small-cap is a company with a relatively small market capitalisation and usually lower trading liquidity.
Special dividend
A special dividend is a one-off payout outside the company's normal dividend schedule.
Standard deviation
Standard deviation is a statistical measure of how spread out an investment's returns are.
Stop-loss order
A stop-loss order automatically triggers a sale once a stock falls to a set price.
Strategic investor
A strategic investor holds a large, long-term stake for control or business reasons, not quick trading.
Strike price (IPO)
In an IPO, the strike price is the final price per share set from the book-building bids.
Sukuk
A sukuk is a Shariah-compliant financial certificate similar in purpose to a bond.
Support and resistance
Support is a price level where buying tends to emerge, resistance is where selling tends to appear.
Technical analysis
Technical analysis studies price charts and trading patterns to forecast future moves.
Term Finance Certificate (TFC)
A TFC is a corporate debt instrument in Pakistan, essentially a tradable company bond.
Terminal value
Terminal value estimates a company's worth beyond the explicit forecast period in a valuation.
Treasury shares
Treasury shares are a company's own shares that it has bought back and holds rather than cancelled.