We’ll be going to talk about start investing in the stock market. Everyone is aware that stock market trading is one of the most popular ways to become wealthy by amassing a significant corpus over time. What prevents individuals from investing in stocks, however, is the belief that it is too complicated. Beginner investors are afraid of the stock market because they believe it is dangerous, time-consuming, and confusing.
Not to worry, this tutorial will educate you on how to invest in the Indian stock market. We provide step-by-step guidelines to assist you to simplify the procedure.
Beginner’s Guide to Investing in Shares in India
Here’s what you should do if you’re a beginner investing in the stock market for the first time.
1. Get a PAN card, if you don’t have one.
All Indian nationals must have a PAN (Permanent Account Number) in order to conduct financial operations such as paying income taxes, opening a bank account, investing in mutual funds, and so on. The Tax Department assigns a 10-digit alphanumeric code to each individual in order to determine tax liabilities.
The majority of people have a PAN card. If you do not already have a PAN card, you must obtain one before you can begin trading in the Indian stock market. This is the very first step in our “start investing in the stock market” guide.
2. Choose your Stock Broker
Individuals are unable to buy or sell equities directly on national stock exchanges such as the BSE and NSE. Instead, you’ll need the assistance of brokers or middlemen.
A stockbroker is a person or corporation who is authorized to buy and sell stocks on the market. SEBI (Securities and Exchanges Board of India) is the organization in charge of overseeing the country’s stock exchange. Individuals and corporations are granted licenses by the SEBI to buy and sell shares on stock exchanges. Individuals and businesses who hold these licenses are referred to as stockbrokers.
You can select a reputable individual stockbroker. Alternatively, you can choose any online brokerage service to assist you in buying and selling stocks on the market. Sharekhan, ICICI Direct, IndiaBulls, Kotak Securities, and more well-known online brokerage businesses are included here.
Please keep in mind that the names of the online brokerage businesses provided above are just examples. It is not a suggestion. So, be sure to do your research and get the best broker for you.
3. Set up Demat and Trading Accounts
After deciding on a broker — whether an individual, a firm or an internet platform – the next step is to open a Demat and trading account.
The Demat account is where you store the stocks/shares in your name digitally. Consider it your internet stock portfolio. Stocks cannot be physically stored in a Demat account. It can only hold shares that are dematerialized. As a result, Demat was born.
All of the shares you purchase in the market are held in your name in the Demat account. Stocks sold will be deducted from your Demat account. The shares in your portfolio are reflected in your Demat account at all times.
A trading account is required in addition to the Demat account. While the Demat account acts as an online portfolio for your shares, the trading account is what allows you to purchase and sell them. It operates as a middleman, facilitating the purchase and sale of stocks.
Don’t worry if you’re wondering how to open a Demat and trading account. In most cases, your broker or online brokerage firm will handle it for you.
4. Understanding the Role of the Depository Participant
Aside from the Demat and trading account, there is another phrase you should be familiar with before you start trading on the stock market. This is the participant who holds the depository. In the country, there are two depositories:
National Securities Depository Limited (NSDL) is an abbreviation for National Securities Depository Limited. And, CDSL stands for Central Depository Services Limited.
Both of these depositories provide depository participants with the ability to hold their shares. Though the depository participant appears to be the same as your Demat account, it is not.
The Demat account displays the number of shares you own, whereas the trading account displays the buying and selling that has occurred in your account. The depository participant is the entity that holds the shares you bought and sold.
While opening Demat and trading accounts, most brokers will register you as a depository participant.
5. That’s All! It’s Time to Trade
Now that you’ve completed all of the necessary steps, it’s time to begin trading. Before you start your first transaction, you need to understand the fundamentals of how it works.
If you wish to buy 10 shares of Britannia Industries Ltd when it reaches Rs. 3400, you must notify your broker. You provide your broker instructions. Buy Britannia Industries Ltd, Quantity: 10, Price: 3400, for example. An alert will be set up by the broker/online brokerage firm. When the share hits that price, the transaction is completed on your behalf.
well. You give your broker an instruction. Sell Britannia Industries Ltd, Quantity: 5, Price: 3600, for example. If the stock hits a certain price, the sell order is executed.
Keep in mind that most buy and sell orders you create are only valid for a limited time – say, one day. If the stock does not reach your specified purchase/selling price during this time period, the order is canceled, and you must make a new order. Buying and selling take place on two stock exchanges in India:
A share may be listed on either one or both exchanges. In general, while placing a sell/buy order, you must provide your favorite stock exchange because the price fluctuates slightly depending on the exchange.
As you can see, investing in the stock market isn’t that difficult. Choosing the proper broker is critical because the broker plays an important part in assisting you to trade. If you haven’t already begun investing in the stock market, we hope this “start investing in the stock market” information & guide will help you get started.