.In recent times, the inclination towards stock market investments has encouraged many to explore this new investment avenue. Just like other investment channels, investing in stocks is also based on certain principles. However, it is believed that stock investment tends to yield better returns after buy shares online as compared to other investment channels.
Stock investment surely has the possibility to make your investment grow and promise astounding inflation-controlled returns over a period of time. Besides yielding probable returns, buying and selling shares through the web can also deliver a high-value experience in stock trading. However, the most important element out of all this is to choose the right shares.
Backed by an obvious financial objective, a majority of investors buy shares online, through a full-service stockbroker or discount stockbroker. To start trading, you need two things – a trading and a Demat account. A Demat account usually serves as the general repository that enables you to store the shares you have bought, while a trading account helps in enabling the actual buying and selling of shares or stocks.
Steps to buying shares online
- Apply for a PAN card
If you are looking to buy shares online, the first and foremost step is to get a pan card. A Permanent Account Number (PAN) is the first obligation to begin investing in the stock market by putting your money in shares. A PAN number is a unique 10 digit Alpha-Numeric number allotted to a person by the Tax Authorities for measuring their tax liabilities. Having a PAN card is an essential requirement that every stock investor needs to fulfil.
- Get An Experienced Stock Broker
The next step to buying shares online is to find a stockbroker. The broker acts as an intermediary between the stock exchanges and the investors. There is a large number of brokerage firms that offer a variety of services in regard to the buying and selling of stocks or shares. Don’t take this step lightly as this is what paves the way for a smoother stock buying experience and better returns. A stockbroker is obligated to be listed and licensed by the Securities and Exchange Board of India (SEBI) – possesses the authority to felicitate the buying and selling of shares over the stock exchange. These brokers can be people or organizations. Do some research to find the best trading app in India.
- Open a Demat and Trading Account
The third step of your journey to buy shares online is to open a Demat and Trading account. It is very easy as your chosen stockbroker would give you all kinds of support regarding this. A Demat account is meant to help you keep your shares in dematerialized form and it is a must for every stock investor. In a similar way, you need a trading account that also helps in the buying and selling of shares. In general, your stockbroker should take care of all this.
You can also invest in mutual funds using through the same best demat account in India.
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Depository Participant
The next and fourth step is to choose a depository participant. There are two main depositories in India: (Central Depository Services Limited) and NSDL (National Securities Depository Limited).
These depositories got their agents active who act as Depository Participants and felicitate an account for the holding of the shares. However, it is not the same as a Demat and Trading account as in Demat it reflects the number of shares you possess and the Trading account shows the details of selling and buying activities that taken place in your account. Depository Participants will secure the shares you purchase and reduce them when you sell them. A depository could refer to a financial institution, broker, or any other unit that can be held responsible for the final transfer of shares.
- UIN – For Big Investments
To buy shares online, you would have to get a UIN number. If you want to invest big, for example, if you want to trade for Rs. 1 lakh or more in a single go, you will require a UIN or Unique Identification Number.
- Pick the Right Share and Purchase
As your ultimate goal is to make a profit out of your stock investments. The next and most important step is to choose the right shares and purchase them. To buy and sell shares, you need to inform your broker about which stock, the quantity, and at what rate you want to buy the stocks.
For instance, if you wish to buy 20 shares of Tata Motors Ltd when it attains the level of Rs. 900, you need to notify the broker : Share: Tata Motors Ltd., Quantity: 30, Price: 900.
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Online brokers generally have dedicated customer care centers. You can contacted for the placement of your order if no internet is available. Further, when the share attains a specific stage, a transaction will be done on your behalf. However, the buy and sell orders remain legal only up to a specific period. If the buy or sell price is not attained to that level. The order stays null and void and you would have to place a new order.
There are 2 major stock exchanges in India: BSE (Bombay Stock Exchange) and NSE (National Stock Exchange). It is necessary to mention the exchange name to your stock broker, however, there are may be minor differences in the price of shares in both the exchanges.
Therefore, when it comes to buying shares online, every investor needs to stick to SEBI-mandated rules. This is why it is advised to count on a reliable stockbroker for trading in stock markets.
