If you are one of the innumerable investing enthusiasts, who get intimidated by the working of the stock market, then you are not alone. Gen Z investors are often excited to try their hand at the stock exchange, but the stock market and its enormity baffle them.
The stock market is the platform where buyers and sellers meet and trade in stocks and securities. These buyers and sellers are individual as well as institutional investors. The price at which these securities are traded is decided by the demand and supply of the security. To invest in the stock market, you need to follow a procedure. It starts with opening an offline or online Demat and Trading account.
A Demat and Trading account are essential tools for individuals interested in investing in the stock market. A Demat account, short for dematerialized account, allows investors to hold their securities in electronic form, eliminating the need for physical share certificates. On the other hand, a Trading account facilitates the buying and selling of stocks and other financial instruments. Together, these accounts provide a seamless and convenient way for investors to participate in the stock market, ensuring secure storage of their assets and enabling swift transactions with ease.
Process of Stock Market Investing
Understanding the stock market investing process will help you enter the stock market as an informed investor and help you avoid surprises when you set out to trade in the market. Let us take you through the process of stock market investing and understand how to start trading in India.
Select your Depository Participant:
In India, you can trade on either of the two exchanges, i.e., the NSE and the BSE. However, you cannot trade on the exchange directly. You need to open your Trading and Demat account with a depository participant and book your buy and sell orders with them. Your DP will carry out your orders on the exchanges for you. There are various stockbrokers you can choose from, therefore, it is advisable to look at the account opening and annual maintenance charges levied by the broker, the brokerage charged by them, the facilities provided by them to the customers, and the support offered to investors while finalizing the stockbroker.
Open your brokerage account:
Once you have selected your depository participant, you need to open your Demat and Trading account with your stockbroker. You can open these accounts online for free with leading brokerage houses. You can open multiple Demat accounts, but each has to be with a different broker.
Link these accounts to your existing bank account:
Once your Demat and Trading accounts become functional, you need to get them linked to your existing bank account which has sufficient funds to let you make buy calls in the stock market. When you sell some stocks in the stock market, the matching amount of funds will be deposited in this bank account for you.
Collecting all the required documents and proofs:
Before you initiate the account opening process for your brokerage account, it is important to have all the necessary documents in place. This will save you a lot of precious time. With a leading stockbroker, you can open an online Demat and Trading account in less than 15 minutes if all your documents are ready. Among the various papers required, your PAN is the most important document that you would need. PAN or Permanent Account Number is the primary document required to conduct any kind of financial transaction in India. Make sure you have an error-free PAN card and other proofs like ID and Address proofs in place.
Place a buy order:
Now that you have all the documents and accounts ready, you can study the market well and make your buy call. You can select a stock of your choice that your budget permits. For this, you can log in to the stockbroker’s website or mobile app and select the stocks you want to buy and their number. The stocks will be transferred in your name at their listed price, and the corresponding amount of funds will be deducted from your bank account and forwarded to the seller.
You need to place your buy or sell order with your stockbroker and also mention the exchange on which you wish to buy these stocks. The price of stocks is slightly different on both the exchanges and the stock may be listed on either or both of them. The process of stock market dealing is simple once you understand how to go about it and can help you be a successful investor in the market.