STP stands for Systematic Transfer Plan, and it involves moving a fixed amount of money automatically and periodically from one mutual fund into another — typically from a debt or liquid fund into an equity fund, at regular intervals such as monthly or weekly. It's essentially a way to convert a lumpsum into an equity investment gradually rather than all in one shot.
This is commonly used when someone has a large sum of money to invest, say from a bonus or the sale of property, but is nervous about investing it all into equity at once in case the market happens to fall right after. By parking the money in a debt fund first and then transferring it gradually into equity via an STP, the investor earns modest returns on the waiting portion while gradually and steadily building their equity exposure over several months.