The stock market is perfect for all types of investors in India. Whether you are an intraday trader or a long-term investor, the stock market offers diverse investment opportunities. Beginners in the stock market might find things confusing at first. They can take some time to understand the basics of the stock market, including the process of investment. Continue reading to understand how to buy shares in the stock market.
- The Process to Buy Shares Online
- Factors to Consider Before Making Stock Market Investment
The Process to Buy Shares Online
Very few investors choose to invest in the share market through offline means. Since the introduction of online trading in India, the need for physical trading has diminished. However, you can still visit a stock exchange in person to make trades. You can also wish to ignore a Demat account, which is used for holding electronic securities. However, you must carry paper-based certificates for each trade upon ignoring the importance of a Demat account. Why indulge in such hassles when online trading and investing options are available? Here’s how you can invest in the share market online:
Choose a Broker
Selecting the right brokerage firm is pivotal. Research various brokers based on factors like reputation, fees, customer service, and the range of services offered. Look for a broker that aligns with your investment goals and trading preferences. Some brokers cater to beginners, providing educational resources, while others focus on advanced trading tools for seasoned investors. Consider aspects such as brokerage fees, account minimums, trading platform usability, research tools, and the variety of investment options offered. Ensure the broker is registered with the appropriate regulatory authorities for security and reliability.
Open a Trading Account
Applying for a trading account involves filling out the broker's application form. Typically, this requires personal information, identification documents, and financial details. Once your application is approved, you'll receive login credentials to access the trading platform. Some brokers might offer a seamless process to open both trading and Demat accounts simultaneously. Funding your trading account is the next step, usually done via bank transfer or other approved methods.
Open a Demat Account
After acquiring a trading account, it's essential to open Demat account to hold your securities in an electronic format. Many brokers provide the option of a 2-in-1 account, integrating the trading and Demat accounts for convenience. To open a Demat account, complete the account opening form, provide the necessary documents (such as identity proof, address proof, and bank details), and e-sign the agreement. Once processed and approved, your Demat account will be linked to your trading account, enabling seamless trading and stock holding in electronic form.
Select the Stocks to Buy
Analyse the stocks of different companies and choose the right one to place a buy order. You can choose from common, preferred, blue-chip, dividend, growth, value, cyclical, and penny stocks in the market. You must consider your portfolio goals, investment strategies, and other factors before choosing a stock.
Recommended Read: What are Shares
Place Your Order
Enter the number of stocks you wish to purchase on the trading platform. While choosing the number of stocks, it is crucial to ensure that you have the required amount in your bank account. Your trading account will be linked with the bank account, and the required amount will be deducted on placing the share market order.
Receive Your Shares
After the execution of the order, you will receive the shares in your Demat account. You can keep shares in your Demat account for as long as you desire.
Besides buying shares on stock exchanges, you can also apply for Initial Public Offerings (IPOs) in primary markets. A trading platform will help you apply for IPOs in India. Don’t forget to apply for an IPO within the subscription period.
Factors to Consider Before Making Stock Market Investment
You must consider a few factors before investing in the stock market, including:
Stock market investors must have clear investment objectives. Take some time and decide on the type of investor you want to become. You can be a long-term investor who holds value stocks or shares of start-ups. Some investors might invest in blue-chip stocks as they don’t want portfolio risks. Develop a definite strategy and make investments accordingly.
You cannot ignore the power of diversification as a stock market investor. Portfolio diversification in the stock market is investing in shares of diverse companies. You can invest in start-ups, large-cap, small-cap, or mid-cap companies simultaneously. Also, focus on investing in stocks of companies belonging to diverse sectors. When you invest in similar types of companies, your portfolio is at risk.
Don’t invest more than you can bear in losses! It is the first and simple rule of the stock market. Analyse your risk appetite and make investments accordingly. There is no need to go beyond the pre-decided trading capital when you are a beginner in the stock market. However, investors with a high-risk appetite can indulge in margin trading and take larger market positions.
You must not step into the stock market without full preparation. Don’t place blindfolded bets on different company stocks. Deep dive and conduct thorough research to find the stock that suits your portfolio. You can rely on a trading platform that offers technical tools for research and analysis.
Recommended Read: Stock Market Basics
Volatility, liquidity, investors’ sentiment, and other market factors must be considered before an investment. Stock market investors must adjust their portfolios based on bullish and bearish markets.
You can buy shares easily with a trading platform. Beginners in the stock market must first choose a reliable stockbroker. The stockbroker will help you with Demat and trading accounts to make share market investments. Investors must also consider their investment strategies, risk appetite, and asset allocation before investing in the stock market. Take some time researching the market factors, like liquidity, volatility, and price swing. Research and analysis will allow you to make informed decisions in the stock market. Choose your stocks today!
Disclaimer: This blog is written exclusively for educational purpose. Any stock mentions in the blog are examples and not recommendations. Please refer to our research reports or analyst recommendations for stock ideas.