Want to sell or buy stocks online? Have you been thinking of starting your investment journey in the stock market? You should always remember that proper knowledge is crucial for buying and selling shares with gusto.
Firstly, what is a stock?
To simply put it, this is a share in any company. Whenever any company is listed, its stocks/shares are traded on the prevalent exchange. These are stocks that you can invest in, with your own money. Whenever you increase your stock holdings in any particular company, your shareholding/stake in the same also goes up exponentially.
Along with stock market timings on a regular basis, you will also have to finalize the way you trade in shares, i.e. through a broker/trusted agent or through financial institutions where your Demat and banking accounts are integrated. This facility is now provided by a majority of private and public sector banks in India.
If you are buying your stocks via any online agency/brokerage/platform, make sure you verify the credentials of the same before starting. The platform or brokerage should be a registered member of SEBI (Securities and Exchange Board of India), the market regulator and other major stock exchanges. The broker will be purchasing and selling shares for you and you will have to pay a fee in this regard as well. While you should certainly have your registered broker, it is better that you seek one with proper investment advice to give, which is based on knowledge.
How to choose the right platform or brokerage
Choose an online stock investment platform or brokerage with a good presence, ample advice and guidance and seamless procedures for fund transfer, registration and so on. You will now have to register yourself for the Demat or dematerialized and trading accounts. The Demat account will be holding the shares in your name and they will show in your portfolio. You will regularly get Demat account statements showing information on shares that you have purchased or sold.
Physical share certificates are now obsolete and online accounts are regarded as the reliable way of authentication in this regard. If you are going for an online platform, it will be setting up your trading account and integrating the same with the Demat account.
The former will help you sell and buy shares swiftly. Demat accounts cannot function all by themselves. Now, if you are buying and selling shares via a brokerage, then the depository account will be taken care of.
There are two Indian depositories, namely the CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). Whenever you sign up at any of these two depositories, you will get an account for storing shares that you have purchased. The function of a depository is to store shares and this is different from trading or Demat accounts.
Key aspects that are worth noting
When you venture to buy stocks online or sell them, you should let your platform or brokerage know about the exchange on which you wish to purchase any particular shares and at the price that you wish to buy the same. The brokerage will wait till the price point reaches your desired level and then complete the transaction on your behalf. Similarly, whenever you are selling your shares, the procedure will be quite similar although you should know that these transactions should be executed within a particular duration. In a scenario where the selling/buying price of any stock does not touch the price anticipated or desired, you will have to make a fresh order since the previous one will stand cancelled.
There are multiple exchanges that carry out selling and buying of shares, namely NSE or BSE among others. You can choose the exchange where you wish to trade.
You should also know that there are some procedural factors involved in the stock market investment process. Most people choose online platforms and brokerages for trading in stocks and this is a good move, making it easier for beginners initially. You also get suitable advice and guidance whenever you need to clear your doubts, making it a win-win situation at all times.
Major things required for stock market investments
You will require the following for investing in stocks/shares:
Linked Bank Account
Cancelled Cheque from a bank account with your name on the same
With these documents submitted to the requisite depository participant/bank/brokerage, you can start investing in stocks and shares. You can invest through IPOs in the primary market. You will have a Demat account for holding allotted shares and the trading account for online applications. You can also apply via the bank account.
You should remember that the number of shares allotted to your name will depend majorly upon the response of the market to the particular IPO. Once all IPO applications are garnered by the company, it will be allotted its shares on the basis of demand and share availability.
You can use your net banking account to apply for the IPO through the procedure named Application Supported by Blocked Amount or ASBA. The amount will be blocked in your account instead of being dispatched to the company. Once shares are allotted, the exact amount will be debited with the balance being released once again. It is mandatory for all IPO applications to adhere to this system. Post allotment of shares, they will be listed on the exchange within a week’s time and you can start trading thereafter.
You can also commence investments in the secondary market with your trading account, listed bank account and Demat account. You will have to open your Demat and trading accounts with the listed banking account. Login to your trading account and choose shares that you wish to purchase/sell. Make sure that funds are sufficient in the account for buying/selling shares in the Demat account. Ensure the price which you wish to sell/buy shares at and wait for the buyer/seller to confirm the transaction. Complete the deal by transferring money/shares and getting shares/money in turn. Stock market trading requires patience, hand-holding and guidance.
Make sure you have enough of all three components for a successful start to your investment journey!