Know How to Buy Shares in India

There are currently more than 15 crore active Demat accounts in India. These investors actively participate in the stock exchange for trading and investing. However, the new investors who have recently opened a new Demat account observe many challenges.

The most significant challenge that new investors face is how to buy shares in India. It is important because knowing how to buy stocks in India not only allows them to start trading but also to find opportunities with higher returns.

Why Invest in the Stock Market?

BSE Sensex has crossed the milestone of 72,000 points. NSE Nifty, on the other hand, is trading above 22,100. This surge indicates investor confidence and shows how investing in an Indian stock market can lead to prospects for wealth accumulation.

It is also increasing investor's interest in buying shares in India. This, however, necessitates knowing how to buy shares in India.

Understanding the Key Concepts

As an investor, you must understand the following concepts:

• Demat Account: To hold shares digitally, you need to have a demat account with a SEBI (Securities Exchange Board of India) recognized broker.
• Trading Account: A trading account enables investors to buy and sell shares that are stored digitally in the Demat account.
• Shares and Securities: Shares represents the units of ownership in a company, whereas securities is a broader category that financial assets that include stocks, bonds, and derivatives.
• Depository Participant: Depository Participants (DPs) are agents of the depository that are responsible for Demat account opening, safekeeping, trading, and settlement of securities.

How to Buy Shares in India Online?

From Demat account opening to trading shares on the stock exchanges, here is a step-by-step process of how to buy stocks in India:

Step 1: Documents and KYC requirements

The first step to start investing in the stock market is opening a Demat account. Before opening an online demat account, you must get all the documents ready. The list of documents important for Demat account opening are:

• PAN
• Aadhar
• Canceled cheque with your name printed
• Address proof (Aadhar, License, and more)
• Passport size photograph

Step 2: Open a Demat Account

To open demat account free of cost, you need a reliable SEBI-registered DP. Opening a Demat Account is possible through a Depository Participant (DP). A DP can be registered with both Central Securities Depositories Limited (CSDL) and National Securities Depository Limited (NSDL).

A Demat Account functions similarly to a bank account in that it allows both deposits and withdrawals. Your account is credited or debited in accordance with the quantity of shares that you have bought or sold.

Step 3: Trading Account

A Demat account enables investors to store stocks digitally, but it doesn't allow selling or buying them. This is why you must also establish a trading account to purchase and sell shares on the stock market. When making an online share purchase, you must provide your Trading Account number.

Step 4: Select the Stock Broker

NSDL and CDSL are the two depositories in India. They store and release shares during buy and share orders, respectively. To buy stocks in India, however, you must employ a broker's services. A broker serves as a middleman in the financial system, connecting you to the stock market.

Step 5: Get a UIN (Unique Identification Number)

SEBI has mandated that investors get a UIN to compile a database of all investors and market participants. UIN is important for placing any order in the trading system.

Step 6: Fund your Trading Account

Before you start investing, you must have sufficient balance in your trading account. Online trading platforms allow you to transfer funds from your bank account for seamless transactions.

Step 7: Placing an Order

After thorough research, select the best stocks for trading, decide on the stock and the price of the stock you want to buy. Next, log into your trading account and place your order. Mention the quantity and price of the share you want to buy. The broker will execute the transactions on your behalf. The quantity of shares you bought is credited to your Demat Account upon settlement.

Conclusion

The Indian stock market outperformed the US, China, and other markets over the previous ten years. During this time, the Nifty large-cap index has produced an annualized return of 10.9%.

In summary, investing in the share market can be a rewarding journey, offering the potential for significant financial growth. While it may seem overwhelming at first, with the right guidance and support, investing in shares can lead to a fulfilling and prosperous experience.