How to Buy Shares in Share Market
How to Buy Shares in Share Market
Investing in the stock market can be daunting, especially for beginners. However, with the advancement of digital platforms, the investment process has become more accessible and convenient.
If you’re new to investing and want to learn how to buy shares in the stock market, here’s a comprehensive guide to help you get started:
How to Buy Shares
1. Educate Yourself
Before diving into the stock market, take the time to educate yourself about the basics of investing.
Understand key concepts such as stocks, shares, stock exchanges, market orders, and limit orders. Learn about different investment strategies, risk management techniques, and the factors that influence stock prices.
2. Set Financial Goals
Determine your financial goals and investment objectives. Are you looking for long-term wealth accumulation, generating passive income, or funding specific financial milestones?
Clarifying your goals will help you align your investment strategy accordingly.
3. Research and Analysis
Conduct thorough research on the companies or sectors you’re interested in investing in. Analyze their financial performance, competitive advantages, growth prospects, and market trends.
Utilize various sources such as financial news, company reports, and analyst recommendations to make informed investment decisions.
4. Choose a Brokerage Account
Select a reputable brokerage firm that offers online trading services. Consider factors like brokerage fees, trading platform features, customer support, and research tools.
Open an account with the chosen brokerage and complete the necessary documentation.
5. Fund Your Account
Deposit funds into your brokerage account to have capital available for investment. Most brokerage firms provide multiple funding options such as bank transfers, debit/credit cards, or online payment systems. Ensure that your account has sufficient funds before proceeding with share purchases.
6. Place Buy Orders
Use the trading platform provided by your brokerage to place buy orders for the shares you wish to purchase.
You can choose between market orders (buying at the current market price) or limit orders (buying at a specified price or better). Enter the desired quantity of shares and review the order details before submitting.
7. Monitor Your Investments
After buying shares, it’s crucial to monitor your investments regularly. Keep track of company news, market trends, and any significant events that may affect your investment.
Consider setting price alerts or stop-loss orders to manage your portfolio and protect against unexpected market movements.
8. Review and Adjust
Periodically review your investment portfolio and assess its performance against your goals.
Make adjustments as necessary, which may include rebalancing your holdings, selling underperforming stocks, or adding new investments based on changing market conditions.
Remember, investing in the stock market involves risks, and it’s important to diversify your portfolio, exercise patience, and maintain a long-term perspective.
If you’re unsure about specific investment decisions, seek guidance from a financial advisor who can provide personalized advice based on your financial situation and goals.
1. Obtain a PAN Card
The first step in buying shares is to acquire a PAN card. A PAN card, or Permanent Account Number, is a unique 10-digit alphanumeric identification number issued by the Tax Authorities. It is a prerequisite for investing in the stock market and buying shares.
2. Find a Reliable Broker
The second step involves finding a reputable broker. It is essential to have an intermediary when transacting on the stock exchange.
Take the time to research and select a broker that suits your requirements and preferences. Brokers must be registered and licensed by the Securities and Exchange Board of India (SEBI) to facilitate share buying and selling.
3. Open a Demat and Trading Account
Next, open a Demat and Trading account. Shares cannot be held in physical form; they need to be in a dematerialized state.
A Demat account will hold the shares in your name, while a Trading account will enable buying and selling. Usually, your chosen broker will assist in setting up these accounts.
4. Select a Depository Participant
It is important to choose a Depository Participant (DP) as well. In India, there are two depositories: NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).
Depository Participants are agents of these depositories and provide accounts for storing shares. However, note that a Demat and Trading account is separate from a depository account.
5. UIN (Unique Identification Number) for Larger Investments
If you plan to invest a significant amount, such as Rs. 1,00,000 or more at a time, you will need a UIN or Unique Identification Number.
6. Choose the Right Shares and Make Purchases
Select the shares you wish to buy and inform your broker about the quantity and desired price.
For example, if you want to purchase 50 shares of Adani Green Energy Ltd when the price reaches Rs. 950, provide the following details to your broker: Share: Adani Green Energy Ltd., Quantity: 50, Price: 950.
Your broker will execute the transaction when the share price meets your specified criteria. Note that buy and sell orders have a limited validity, typically within the same day or the next.
The buying and selling of shares occur on two exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). Specify the exchange to your broker, as there may be slight price variations between the two.
When purchasing shares, it is important to adhere to the rules mandated by SEBI. Choose a trusted broker, consider your long-term financial goals, and make informed decisions based on market movements and share prices.
Remember, investing in the stock market involves risks, and it is advisable to stay updated, diversify your portfolio, and consult with financial advisors when needed.
Summary
Once you have gathered the necessary information on how to invest in the share market in India online, the next step is to open a Demat account with a broker of your choice. Here are the steps to get started:
1. Research and Select a Broker
Take the time to research and compare different brokers based on factors such as reputation, reliability, fees and charges, customer service, trading platforms, and available investment options. Choose a broker that aligns with your investment goals and preferences.
2. Visit the Broker’s Website
Once you have selected a broker, visit their official website to begin the account opening process. Most brokers provide a user-friendly online platform where you can easily navigate through the necessary steps.
3. Fill Out the Application Form
Fill out the online application form with accurate personal details, including your name, contact information, PAN card number, bank account details, and any other required information.
4. Submit Required Documents
Along with the application form, you will need to provide certain documents for verification purposes. These documents may include your PAN card, Aadhaar card, proof of address (such as a utility bill or bank statement), passport-sized photographs, and any additional documents requested by the broker.
5. Complete the KYC Process
To comply with Know Your Customer (KYC) regulations, you may be required to undergo a verification process. This can be done online by submitting scanned copies or images of the necessary documents. Some brokers may also offer video KYC verification.
6. Sign the Agreement
Read and understand the terms and conditions, risk disclosures, and other legal agreements provided by the broker. Once you are satisfied, digitally sign the agreement or provide your electronic consent.
7. Fund Your Account
After your account is successfully opened, you will receive your Demat and Trading account details. Fund your account by transferring the desired amount from your linked bank account to start investing.
8. Research and Select Stocks
Before making investment decisions, conduct thorough research on various stocks and analyze their performance, financials, market trends, and future prospects. Consider factors such as company reputation, industry trends, and diversification.
9. Place Buy Orders
Using the broker’s trading platform, place buy orders for the selected stocks by specifying the quantity and desired price. Monitor the market and place orders accordingly.
10. Monitor and Review Your Portfolio
Regularly monitor the performance of your investments and stay updated with market news and events. Review your portfolio periodically and make adjustments as needed to align with your investment goals.
Remember, investing in the share market involves risks, and it is advisable to diversify your portfolio, set realistic expectations, and seek guidance from financial advisors if required.
Stay informed, stay disciplined, and make well-informed investment decisions for better outcomes in the share market.
