Glossary · Investing Basics
Stock
A unit of ownership in a company. Holding stocks makes you a shareholder, entitled to a proportional share of the company's assets and profits.
01—What is Stock?
The definition — and what it means in practice.
A stock is a unit of ownership in a company. When you hold a company’s stock, you are a shareholder and own a proportional claim on the business’s assets and profits. Stocks are typically issued as shares with equal rights within the same class (often called ordinary shares), and their market price can move up or down based on investors’ expectations about the company’s performance and risk.
Stocks matter because they are a primary way individuals participate in company growth and shareholder payouts. Your return can come from price changes and from distributions such as cash dividends (when declared). As an owner, you are exposed to business risks: earnings can fall, dividends may be reduced, and the share price can be volatile. Understanding stocks helps you compare opportunities, manage risk, and build a diversified portfolio.
If you buy 100 shares of a company, you own 100 small pieces of it and can benefit if it earns profits or pays dividends.
- A stock represents ownership; shareholders have a proportional claim on assets and profits.
- Returns can come from price movement and dividends, but both are uncertain.
- Stock prices can be volatile because they reflect expectations and risk.
- Different share classes can have different rights; check what you are buying.
02—How stock works on the PSX
The Pakistan-specific rules, conventions, and numbers.
In Pakistan, stocks of listed companies trade on the Pakistan Stock Exchange (PSX), formed in 2016 by merging the Karachi, Lahore, and Islamabad stock exchanges. The market is regulated by the Securities and Exchange Commission of Pakistan (SECP). Trades clear through the National Clearing Company of Pakistan Limited (NCCPL), and shares are held electronically in the Central Depository Company (CDC).
A PSX investor typically trades in standard board lots (often 100 shares) through a broker that holds a Trading Right Entitlement Certificate (TREC) licence. You also need a Unique Investor Number (UIN). Settlement is T+1 (one business day), meaning the cash and shares are due for exchange on the next business day after the trade.
PSX equities commonly have daily price limits (circuit breakers) of ±10% or Re 1 around the previous close (LDCP), whichever is higher, which can affect how quickly prices move in a single session. Many listed shares have a Rs 10 face value, and dividends are often declared as a percentage of face value (for example, a “100%” dividend equals Rs 10 per share). Cash dividends are subject to withholding tax: 15% for filers and 30% for non-filers.
03—Common misconceptions
Where investors most often get this wrong.
Buying a stock means the company must pay me a dividend.
Dividends are not guaranteed. A company may pay, cut, or skip dividends depending on profitability, cash needs, and board decisions.
A “100% dividend” means I doubled my money.
In Pakistan it commonly refers to face value. With a Rs 10 face value, a “100%” cash dividend means Rs 10 per share, before withholding tax.
Because settlement is T+1, I can always exit instantly at any price.
T+1 is the settlement cycle, not a promise of liquidity. Your ability to sell depends on market demand and available bids in the order book.
04—Using stock on BSL
Where this term shows up across the platform — with live data.
- Browse tradable listings on our Stocks page.
- Filter companies by metrics using the Stock Screener.
- Track price moves and activity through the Market view.
- Check upcoming announcements via Board Meetings.
05—Frequently asked questions
What investors ask about stock on the PSX.
Frequently Asked Questions
A stock on the PSX is a listed company’s share that represents ownership in that company. By holding it, you participate in potential profits and losses through share price changes and any dividends the company declares.
PSX equity trades settle on T+1, meaning the exchange of cash and shares is due one business day after the trade date. Trades clear through NCCPL and shares are held electronically at the CDC.
Yes. You need a Unique Investor Number (UIN) and you place trades through a broker that holds a TREC licence. For small investors, the Sahulat Account is a simplified, low-documentation account option.
For most equities, PSX applies daily price limits around the previous close (LDCP): ±10% or Re 1, whichever is higher. These limits can restrict how far a stock can rise or fall during a session.
Dividends are often declared as a percentage of face value. Since many listed shares have a Rs 10 face value, a “100%” cash dividend typically means Rs 10 per share, before withholding tax.
06—Related terms
Keep building the picture.
Ownership interest in a company, represented by shares. Equity holders are entitled to a share of profits and residual assets after liabilities are settled.
The most common form of share capital, entitling holders to proportional ownership of a company. Ordinary shareholders may receive dividends, subject to profitability and directors' recommendations, and typically retain voting rights.
A company whose shares are officially traded on the Pakistan Stock Exchange, following SECP and PSX approval and compliance requirements.
A standardised number of shares set for trading transactions on the PSX. In most cases, a board lot is 100 shares, though this can vary depending on the security's price level.
A direct payment made by a company to its shareholders, usually from profits, expressed as a rupee amount per share. Subject to withholding tax in Pakistan.
The current standard settlement cycle on the PSX, where trades are finalised one business day after the transaction date. The shift from T+2 to T+1 was implemented to reduce counterparty risk and improve market efficiency.
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