Leverage
Market basicsUsing borrowed money to control a larger position than your own capital would allow.
In plain terms
It multiplies the outcome, not your accuracy — and adds an interest bill that arrives whether you are right or not.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
Showing 16 terms
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Operating leverage
Fundamental analysisAlso called: Degree of operating leverage, DOL
The degree to which a company’s profit changes for a given change in revenue, set by its ratio of fixed to variable costs.
In plain terms
The cinema versus the caterer. High fixed costs mean a 10% sales rise can be a 40% profit rise — and a 10% fall can be a warning.
Debt covenant
Fundamental analysisA condition in a loan agreement that the borrower must maintain, such as a maximum leverage ratio.
In plain terms
Breach one and the lender can demand repayment early. Rating reports state the thresholds explicitly.
Margin
DerivativesCollateral required to hold a leveraged position, adjusted daily against market movements.
In plain terms
A margin call is the broker asking for more collateral, immediately.
Margin call
Market basicsA demand for additional funds when collateral behind a leveraged position falls below the required level.
In plain terms
Pay up or the broker sells for you — usually at the worst price, in the falling market that caused the call.
Badla
Market basicsThe pre-2001 practice of carrying a position forward into the next settlement period for a charge, instead of settling it.
In plain terms
Leverage available to anyone with a broker and no formal margin behind it. Ending it, and moving to rolling settlement, is why positions now settle on a fixed short cycle.
Beta
Technical analysisHow much a stock moves for a given move in the index.
In plain terms
Beta 1.6 means a 10% index fall usually takes it down 16%. That is leverage, not skill.
Corporate guarantee
AccountingA parent company guaranteeing the borrowings of a subsidiary or group entity.
In plain terms
Not your debt until it is. Add guarantees to debt when stress-testing leverage.
Derivative
DerivativesA contract whose value is derived from an underlying asset such as a stock or index.
In plain terms
A bet on something else’s price. Leverage makes it fast in both directions.
EV/EBITDA
Fundamental analysisEnterprise value divided by earnings before interest, tax, depreciation and amortisation.
In plain terms
The only common multiple that accounts for debt. Use it whenever leverage differs.
Exposure margin
DerivativesA further margin levied above SPAN, set as a percentage of contract value or as a multiple of volatility.
In plain terms
On top, never instead. Adding it to SPAN is what turns the leverage figure people quote into the real one — usually nearer five or six times contract value than the number an advertisement implies.
Gross debt
AccountingAlso called: Gross borrowings
Total borrowings before deducting cash — non-current borrowings plus current borrowings, including the current maturities of long-term loans.
In plain terms
The number every leverage ratio starts from, and the one that says nothing at all about when any of it has to be repaid.
HNI
Market basicsAlso called: High net worth individual, NII
High net worth individual — in a public issue, the non-institutional category, which covers applications above ₹2 lakh.
In plain terms
Often heavily leveraged short-term money chasing a listing pop, which is why a huge NII subscription says more about funding costs than about the company.
MCX
DerivativesMulti Commodity Exchange — India’s main venue for commodity futures.
In plain terms
Where crude, gold, silver and industrial metals trade as dated, leveraged contracts.
Peak margin
Regulation & taxA requirement, in force since September 2021, that brokers collect margin upfront in full, verified against randomly timed intraday snapshots of the client’s position rather than the end-of-day figure.
In plain terms
The rule that quietly ended the intraday leverage Indian brokers once advertised. Being flat by the close no longer helps if the position was larger when a snapshot was taken, and the shortfall attracts a penalty.
ROCE
Fundamental analysisReturn on capital employed — operating profit as a percentage of debt plus equity.
In plain terms
The honest version of ROE. It cannot be manufactured with leverage.