Traditionally, gold and shares are the most sought after investment arena for Indian investors. However, if you are someone looking to invest in shares in India, and are just starting off, the first question in your mind would be.
The best part is that even people who have never ever invested in shares will have strong opinions and even tips at times for how to invest in share markets. So if you are someone who simply does not want to stand and give tips without doing anything and wants to actually invest in share markets in India, then here is how to get started with share market investment in India: So let us have a look at what a beginner must do to get started with their stock market investments.
Here is a 6 step guide to help you out. PAN or Permanent Account Number is a primary requirement for entering any financial transactions in our country. It is unique 10 digit Alpha-Numeric number assigned to an individual by the Tax Authorities for assessing their tax liabilities. PAN is however required for opening a bank account, investing in mutual funds, filling Income Tax returns etc.
Also the first thing you will need to be able to invest in shares in India is a PAN card, so get it first. People are authorized to buy and sell on the markets and they are called brokers. Brokers can be individuals or companies and even online agencies that are registered and licensed by SEBI or Securities and Exchanges Board of India, who regulates the share markets.
Get a broker, they can be individuals you know and are reliable, or you can approach various companies that are licensed to trade and deal in securities in the markets. The names given here are just given as examples of well-known companies offering online broker services, they are neither recommendations nor a testimonial to their performance , and please do a research before selecting your broking firm.
Once you have a broker, whether in form of a person, company or online, you will now need a Demat and Trading account. Demat account will hold the stocks or shares in your name and the same will reflect in your stock portfolio. You cannot hold shares in physical form or store them physically.
They have to in Dematerialized state or Demat state. A Demat account does that for you. It will store the shares you buy from the markets through your brokers in your account in your name. The selling will also be from here and it will reflect in your Demat statements that you receive from time to time. You will never have a physical share certificate in your hands; it will be reflected in your Demat Account Statement.
The buying and selling of shares you wish to have or want to sell will however require a Trading account. Trading account will be like an intermediary who facilitates the buying and selling. Usually your broker takes care of all this. Whether you approach an individual broker, a broking firm or online agencies, the Demat and Trading accounts will be opened simultaneously as it is one without the other is useless for investing in shares in India.
There is also a Depositary Participant that you need to be aware of. There are two depositories in India: These two have their agents in the form of Depository Participants who will provide an account to store the shares you hold. It is not the same as Demat and Trading account as in Demat it shows the number shares you hold and the Trading reflects the buying and selling that has taken place in your account. Depository Participants will hold those shares you bought and release the shares you sold.
However, it is usually taken care of by the broker who will also guide you through the Demat, Trading account opening process as well as register with a Depository. But you need to be aware of it none-the-less. Otherwise, for regular investors it is not required. For buying or selling shares, you need to inform your broker about which share in what quantity you wish to buy at which price.
For example if you wish to buy 10 shares of Reliance Industries Ltd when it reaches a price of Rs. In case of online broker too, they usually have customer care numbers where you can place your order if you do not have access to the internet at that point.
When the share reaches that price, transaction will be made on your behalf. Same is done in case of selling, for example Sell: Reliance Industries Ltd, Quantity: The sell order will be processed when the share reaches that price. However the buy and sell orders remain valid only up to a certain time, usually the same day or the next. Your broker will inform you of the same. If during that time frame the buy or sell price is not reached, the order is cancelled and you need to place a new order.
The buying and selling takes place in two exchanges: These are the only two exchanges in India where buying and selling of shares and commodities take place. You need to mention the exchange to your broker too, as there is usually a slight difference in price of shares at the two exchanges. However your broker can guide you here in case you do not understand where to trade. The names given here are just given as examples, they are neither recommendations nor a testimonial to their performance, and please do a research before buying or selling shares.
Please refer our post on the 11 mistakes to avoid when investing in shares here. It may help you to avoid some common blunders share market investors makes while making stock market investments in India.
I keep updating this post and write new ones. So do watch out. Also, do note that most of the tips shared here are evergreen and will help you out in most cases. Use your best judgement. Your email address will not be published.
Thank you for your interest in the site. There are lot of investor education programs by various companies that you can attend. Also you could take up courses on stock markets from reputed trading houses or institutes to better your understanding in stock markets before you can trade.
Also I do not recommend daily trading in stocks unless you are experienced trader. Long term investment in stock markets is always advisable. I want to start investing,,but before that I want to educate myself on the market as I have limited funds…can you please recommend the best online course….
I would recommend you to enroll for investor education courses that lot of Demat service providers like ICICI Direct Kotak Motilal Oswal etc or others and you should also take guidance of someone trusted who has been investing in shares for sometime.
I downloaded kotak securities stock trader app and registered on it. After they called me and assigned person to deal with me.
I dont know much about trading? What care should be taken? You need to verify if they are charging anything for their services. The person may be a relationship manager to handle clients and is generally safe. You should never reveal your password, PIN and you should be fine.
To cross check if the person assigned is genuine or not you can call Kotak Securities helpline number and ask about your account and whether any person is assigned to you by the company and what is his name. If the person whom the company assigned is the same what the helpline told you, then you need not worry about it.
Also they person assigned to tou can guide with trading also. In your article you just mentioned that If during that time frame the buy or sell price is not reached, the order is cancelled and you need to place a new order. If the price id not reached…. In such case no stocks will either come in or go out of your account. Meaning, if u placed sell order at Rs. You will not loose those shares till a successful sale transaction takes place.
So they there with you only. Pretty much what I mentioned in this post are the basics of investing in stock markets. Do not take a loan from anyone to invest in shares or any kind of investment. Look at bluechip companies who have had a good track record over the last 5 years. Ad avoid these basic mistakes mentioned over here: What are the conditions in which I can keep shares as long term investment? If you wish to keep the shares for long term, you can do so without doing anything.
Just buy them and let them be. You need not inform your demat provider about anything. They will be there. As long as you do not ask them to Sell or Buy as per your Price, they do not do it on their own. So simply buy and keep. As far as long term investment is concerned you can keep the shares for any number of years. If the company whose shares you have bought is a sound company and is known to have a good track record, you can keep the shares for long term. As far as buy or sell price question is concerned, if you wish to sell you tell your demat provider a certain price to sell.
Example sell Cipla for Rs. Same is for buying. If we are keeping the shares for longer time do we get any interest on the amount invested in particular company??
There is no interest as such on shares, there is value appreciation — meaning the value of the shares you hold may go up. This also goes down, depending upon the markets. But if keep it for a longer term, the value of a share will invariably be on the higher side from the time you had purchased it.More...