Stock Trading in India and How to Get Started
Overview: For starters, we begin by learning about the types of accounts and the process of investing in primary and secondary share markets to fully understand the scope of stock trading in India.
Let’s begin by talking about stocks – they are traded and issued freely on a stock exchange. Wait, do you know what a share is? A share is a marketable document that proves you own a portion of a company. Buyers and sellers trade these documents on the stock exchange. It is a legitimate marketplace for investors to invest their money and enable a public exchange. India has two stock markets—the Bombay Stock Exchange and National Stock Exchange.
Now, the act of investing refers to putting money aside when you’re preoccupied with other things, having it perform for you in the future so you can realise the full benefits of your hard work. You generally invest to achieve a beneficial outcome. Warren Buffett, a well-known investor, defines trading as “the act of putting money out now in the hope of collecting more money later.” Investment, then, is the process of investing money into one or more types of investment vehicles in the hopes that it will appreciate over time. The various types of accounts you can place your shares in are as follows:
● Demat account: You can place your shares in an electronic Demat account available in various banks. You can open this account online or in person with the help of a depository participant.
● Trading account: You can use this account to buy and sell securities on the stock market. To invest in the stock market, you’ll need a Demat and a Trading account. You can even create a two-in-one account – both a Demat and a Trading account. It’s best to register a Trading account with a depository participant that supports both stock exchanges, the BSE and the NSE.
● Linked bank account: To ensure that your money flows in and out of your bank account, you must link it to your Trading account. This information is usually requested when you create a Demat account with a broker. Some brokers now offer a three-in-one account to trade bank accounts while holding all your assets in one location.
If you wish to invest in equities traded on the market, you can open the instant Demat account and trading account within 1-working hour by having the following:
● Aadhaar Card (Linked with mobile number)
● PAN Card
All the process is online (paperless), having the fastest approval within 5 minutes to 1 hour.
What is the Investment process?
To put it simply, the investing procedure is different when deciding to invest in the primary share market versus the secondary share market.
Now, let’s talk about investing in the primary share market
An initial public offering (IPO) is a primary stock market investment. After a firm has received and counted all IPO applications, shareholders are allocated shares based on market and availability. Your account is debited to the exact amount when your shares are allotted, and the leftover balance is released.
You must use this approach for IPOs. You can easily find shares posted on a stock market and exchange them within a week of being allotted.
Next comes the process of investing in the secondary share market:
Stocks are bought and sold on the secondary share market by individual investors. To participate in the secondary stock market, you must follow these instructions:
● Using your associated banking account, open a Demat and Trading account.
● Log in to the trading site.
● Choose the stocks you want to purchase or sell.
● Make sure you have the necessary amount in your bank if you want to buy shares.
● Pick whether you wish to buy or sell a particular share at a specific price.
● Wait for the purchaser to accept your invitation.
● Pay for and get the shares or transfer the shares and receive the money to complete your share price transaction.
Stock investing is a straightforward procedure. Before you buy stocks, you must decide on your investment objective and financial plans. Make sure you have advanced tools, skilled advice, and important real-time stock data critical for risk reduction as a newcomer in the stock market.