The Truth About How To Invest In Share Market in India
The Truth About How To Invest In Share Market in Indiahttps://themoneyvalue.com/how-to-invest-in-share-market/The Truth About How To Invest In Share Market in India is a beginner guide. Now a day's many people are asking about the share market. I mean they want to start the investing but they don't know from where to start. So here we are here with beginner guide about How To Invest In Share Market.
Gold is most favourite investment options for Indians for investment and it is still. Because of this share market is kind of neglected by the domestic investor.
"In what capacity can a learner invest into share market in India?"
Well here is a manual for how to invest in share market
Many times i saw people follow so-called Baba or guruji or king in share market. Really? following all those Baba, guru etc. saved you from losses? The answer is no, all these free channel and group are made for the purpose. The main purpose is to sell their services to you.
How To Invest In Share Market in India - Starter Guide
How to invest in share market in India. The topic is wide we are not only talking about as beginner guide but also some other information on how to invest in share market.
Let's start with basic requirements. How to invest in share market in India is a starter guide. Here is a 5 step guide to help you out.
1. Basic Requirements
Get an Aadhaar Card/UID-
Nowadays government linking everything with Aadhaar card and that's why the requirement of the UID is on top. It's a 12 digit numerical unique identification number. Issued by Govt. of India. Nowadays Aadhaar is required to Open 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 an Aadhaar card, so get it first.
PAN Card-
PAN or Permanent Account Number is an essential prerequisite for entering into any financial transaction in our nation. It is one of a kind 10 digit Alpha-Numeric number allotted to a person by the Tax Authorities for evaluating their duty liabilities. PAN is anyway required for opening a Bank Account, putting resources into common assets, Mutual Fund investment, filling Income Tax returns and so forth. Also, the first thing you will need to be able to invest in shares in India is a PAN card, so get it first.
You might wonder is PAN first or Aadhaar first, Off-course PAN Is first but Aadhaar is also Mandatory nowadays.
This is the basic and first requirement in how to invest in share market in India.
2. Share Brokers
The broker is a middleman between You & Mr. Market. You can not go directly and invest share market in india. Before selecting broker it is important to understand the types and services provided by the brokers. Mainly two types of brokers include discount brokers and full-service brokers.
Things should be kept in mind while selecting the stockbroker
- Requirements- While selecting the broker one should be very clear, whether he wants to do trading or investing. Your selection of brokerage firm depends on theses as well. Fees and Charges are very on both the cases.
- Cost & Efficiency- There are different kinds of fees associated with a broker. There are account opening fee, transaction fee, maintenance fee etc. Look for fewer transaction fees if you trade more often, and low maintenance fee if you hold the stock for a longer duration.
- Software / Platform- Software is nothing but the thing will be used while buying and selling the shares. Basic things software should be user-friendly. Brokerages are increasing capacity to utilize advanced technology through software development and market research tools. The main use of software to help you in uniform decision making. Time is also important in share market. in conclusion, two things to rememberer One is Ease of use and second accuracy provided by the software. Must have the latest technology.
- Research facilities- Different brokerage house have the different platform for trading. Each one has different research facility. Nowadays many software is coming with the Artificial Intelligence (AI). AI is still in developing phase but you can use as a backup for your research. How To Invest In Share Market in India needs a lot of data to do the research. Make sure your broker has access to past data of the share market. Past data will not give any kind of guarantee but it will help you to understand the patterns.
- The reputation of the broker- Why reputation? because you don't get the cheat. Many small brokers and so has the history of cheating. You need to give them the Power of attorney while opening the account. So, he has all rights to do with your account. He can sell or buy on your behalf. Therefore reputation of the broker is very important. Through reputation research, you will be able to see any issues complaints that exist against a broker or browse their personal experience working with investors in the market. Choose a broker who is highly experienced and has an up to date knowledge of the inner workings and trends of the market.
Types of Brokers
Mainly there are two Types Discount Broker and Full-Service Broker
Discount Broker-
nowadays they are playing a very important role.. They are giving very tough competition to our traditional/ full-service brokers. Discount brokers basically provide the trading platform to investors/traders. No advisory service provided by them. why they famous because Discount brokers charge low brokerage.
Derivatives, currencies and commodities at Rs 10/per trade (lowest in the industry), irrespective of the invested amount. Over the last few years, discount brokers have established themselves in the market and are giving a neck-to-neck competition to full-service brokers who have been in the industry for quite a long time.
- Major Indian Discount Brokers
Name of the Brokers | Account Opening Fees | Maintenance Charges | Brokerage |
Zerodha | Rs. 300 | Rs. 300 | 0.01% or Rs. 20/executed order whichever is lower |
RKSV | Rs 200 | Rs 150 per year | Rs 20/trade or 0.01% whichever is lower |
Wisdom Capital | Free | Lifetime Free | 0.00 % & or Rs. 9 Per Trade |
SAS Online | Rs. 300 | Rs. 200 | Rs 9/trade |
5Paisa | Rs. 650(1 time) | Rs. 400/year | Rs 10 /executed order |
Full-Service Broker
Full-service brokers or traditional brokers are brokers who provide advisory and trading facilities in stocks, commodities and currencies. Traditional “full-service” brokers do more than just facilitate the buying and selling of a stock or bond. Since you are getting personalised recommendations and service, traditional brokerages often come with higher fees, generally charging 1-2% on the assets managed.
These brokers charge commission in percentage terms on the total amount of trade clients execute. Full-service brokers operate out of many offices and branches across the country,
Traditional brokerage fees are something to carefully consider, especially if you are investing and planning for your retirement. But if you really don’t want to invest on your own—instead preferring personalized advice and guidance—then a traditional brokerage could be the right choice.
- Major Indian Full-Service Brokers
| Name of the Brokers | Account Opening Fees | Maintenance Charges | Brokerage |
| Angel Broking | Rs. 350 | Rs. 300 | 0.50% |
| AXIS Direct Brokerage | Rs 999 | Rs. 400 | 0.50% |
| HDFC Security | Rs 999 | Rs. 550 | Higher of 25 or .5% |
| ICICI Direct | Rs 975 | Rs. 500(mail statement) or Rs 450 (email) | 0.55% & for Intra day 0.05% |
This is the Second Step for in how to invest in share market in india.
There are a lot of books available where you can learn how to invest in share market, please refer to the article on "Top 10 Books on the stock market"
3. Depository Participant-
Now you must ready with the application form for your favourite broker. Wait we have someone to be intermediaries between you and Mr. Market. Guess who? calledDepositary Participant. They are the intermediaries between the depository and the investors.
In India, there are two depositories: NSDL and CDSL which stands for National Securities Depository Limited and Central Depository Services Limited. These two have their agents in the form of Depository Participants who will provide an account to store the shares you hold. It's either NSDL or CDSL no more options here.
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. You don't have a lot of choices here.
How to invest in share market in India?. We Just completed the third step.
4. Get a Demat and Trading Account
We are at 21 century and here we are not allowed to hold shares in Paper format. So share must be held in Dematerialised from. This is next step in how to invest in share market in India. Once you selected your broker and DP. You need to open a Demat and
Trading account.
So Your Trading account will be at either in Discount broker or Full-service broker. You need to open the trading account with them. To hold the share you bought you need a Demat account. The Demat account will be opened at Depository participant mentioned in the third step of this article. It will be NSDL or CDSL as the case may be.
The Demat and Trading accounts will be opened simultaneously as it is one without the other is useless for investing in shares in India.
In a nutshell to buy or sell you need a trading account. To keep your shares which you bought you need a Demat account. So they are together only.
5. Get Ready to Buy and Sell
Yuppy, So in How to invest in share market in india. We started from basic requirements, where we look for PAN & UID. Next step was selecting the correct broker. Hope you selected the correct broker based on your requirements in step Two. You do not have more choice in selecting Depository Participants in india.
So now we are on the field. First, you need to upload money on your broker wallet. I mean you can not buy unless you have funds in your account. You need to communicate the buy quantity with the broker.
Type of Orders (buying and Selling)
Before you start to buy and sell you need to understand few Basic things here. Each broker has this minimum four kind of buying or selling order option.
- Market Order-
- Here you do not have the option to select the price. when you place an order and select Market. The system will automatically place an order at market rate. So it is the best price available to buyer or seller.
- If you see in bellow image, price tab is non-editable. as a result, the system will buy or see at best match price.
- You can see if you want to buy HDFC Shares at market price, The tab for a price is not active.
- Limit order-
- Here you have the option to select the price and
- it will be executed only when it reaches the limit given by you.
- See bellow as an illustration, for how to buy or sell limit order in Zerodha.
- You must be noticed, the price tab is active now hence you can place the
- Stop Loss (SL) order and Stop Loss Market (SL-M) Order-
- When you are holding a particular stock/F&O/commodity. Fear the losses that can happen when the price starts moving against you.
- You place an order to limit such a loss it is called as a Stop Loss order.
- In fact, the difference between a stop loss (SL) and a normal order is the trigger price
- In a stop loss order you choose limit or market, but with a trigger price.
- What a trigger price does is that it activates your order which otherwise is inactive. (Ref- Zerodha[com]).
- In a normal order, you get to choose either limit order or market orders.
- See below images for each one as an illustration.
How to Buy
Let's say you want to buy 10 shares of Maruti when it reaches a price of Rs. 9000, you have to inform the same to you broker; Share of Maruti. Quantity: 10, Price: 9000. 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. Alternatively, you can log in to the portal via Userid and Password. Once you log in, here is how to place a buy order.
I use Zerodha broker and how his buying window looks like.
Your buying transaction will be completed, Once it reaches to given limit. We follow T2 system. So it takes Two working days to add to your portfolio.
How to Sell
Let's say now you want to sell the shares. Sell: Maruti: 10 Shares, Price: 9110. Once share price reaches to given limit, sell order will be executed. 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.
Here how Zerodha Sell window looks like.
First of all, please remember this buying and Selling takes place at NSE or BSE Stock Exchange. These are the only two recognised and supported SE by the online brokers. 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. While selecting the shares you will see extension after name whether it is trading to NSE or BSE.
Please note The names given here are simply given as illustrations, they are neither proposals nor a tribute to their execution, and kindly complete an exploration before purchasing or offering/selling shares.
Conclusion
How to invest in share market in India, I conclude here hope you enjoy the reading. Here is a small summary for you.
Share market is not a poker, where you became the Rich overnight but you definitely lose your money if you don't follow the discipline in investment. Please refer our post on the Be Intelligent Investor, Follow the Golden Rules in In how to invest in share market in India. It may help you to avoid some common mistake share market investors make while making stock market investments in India.
Also Do NOT follow, so-called BABA and Guru in share market blindly. In conclusion, maybe many of them trying to sell their products to you. hence try to use your judgement about the person. Don't buy anything which you don't understand. At starting point stay away from Intraday trading. Futures and options are created for hedging be careful while trading in F&O. Be consistent with stock selection in F&O, learn the stock pattern.
In addition, if you want to know more about New Ekyc Portal and linking aadhaar, please refer our guide on New eKYC EPFO Portal Link Aadhaar Track EKYC without Login.https://themoneyvalue.com/wp-content/uploads/2018/06/stock-624712_640-1.jpg
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