How To Buy Shares Online In India in 2022: Beginners Guide

When anyone wants to learn how to buy shares online in India, they should be well versed with some basic knowledge about shares, the stock market and how the stock market works. Regardless of your background, amassing wealth and money can be challenging as managing it needs more experience. Let’s also think about the various options of investments available to us in today’s world. Investment in stocks or shares has the potential of generating much higher returns in a comparatively small amount of time. This is why most people are dissatisfied with the rate of return generated by conventional methods of investments like a fixed deposit, a recurring deposit, gold, a mutual fund etc. Keeping this in mind, let’s get started on how to get you some shares online in the India market.

How To Buy Shares Online (In India)

Buying stocks have made people millionaires or billionaires in a span of a few years,

but if not managed properly, the process has caused many bankruptcies as well! For your question on how to buy shares, here are all the steps involved that can help you avoid going bankrupt.

1. Find a broker

There are 2 major stock exchanges in India for the trading of shares, The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). And for making transactions, a stockbroker is needed. So, the first step is to search for a broker that suits your needs. A broker is an intermediary company or online agency acting between individual investors and stockbroking firms. Some brokers provide other services like research, investment products, financial advice, etc. and charge accordingly. After carefully evaluating all the services provided by different brokers and their fees, one should decide upon their broker.  It is mandatory for a broker to be a member of SEBI.

Offline brokers tend to charge a heavier fee as compared to online ways of buying shares. Moreover, the whole process is more time-consuming. Whereas through online means, the transfer of funds, placing orders and buying and selling of shares can be done just by a few clicks on one’s computer and even mobile phones. Many trading apps are available where one can open an account with brokers and access the trading platform on their mobile phones, tabs, laptops, etc. The brokerages and fees charged by online brokers are very less in comparison to the offline method of buying and selling of shares.

2. PAN Card

The second step in how to buy shares online in India means getting your PAN card out from your wallet. This is simply because you must submit your PAN card number for all financial transactions. So, for those of you who don’t have a PAN card, here is the final reason for you to go and get one now.

3. Open demat and trading account

When it comes to buying shares online in India, the first and foremost requirement is a demat and a trading account. The demat account is a placeholder where all your stocks and shares will be held electronically. You can think of it as a bank for your shares to deposit (buy) new shares or withdraw (sell) existing shares.

The two major depositories in the country are NSDL and CSDL.

4. Get familiarized with your depository

The fourth step on how to buy shares online in India is learning about the two major depositories in the country.

Depositories act as a bridge between you, the company whose shares you want to buy and other shareholders. The depositories ensure that you have access to seamless paper-less transactions. Such depositories transact the shares via agents known as depository participants (DP). Depository participants may be a broker, or financial institution or a bank.

5. Buy or Sell Shares

The person who connects you with buying or selling shares online is a broker. So you let him know the number of shares that you want to buy, the cost at which you wish to buy them and the number of shares also. Your brokering agency will then purchase the shares on your behalf but there is the caveat of time validity until which the orders are valid. So it goes without saying that the same process is applicable to the selling of shares also.

For those of you who are wondering how to buy shares of a coveted company that you always been interested in, here are some easy steps to do so after the steps mentioned above are fulfilled:

  • Keep the money in your savings account that is linked to your demat and trading account.
  • Finalize which shares you want to buy, either using an analysis method or recommendation.
  • Place an order for buying shares at a specific price point.
  • Keep reviewing your positions regularly.

The steps to buying shares in India for beginners remain the same. During the initial days, you can take the recommendations provided by the research team of brokers, before you come up with your method of buying or selling. If you are wondering how to buy shares online in India, with the existence of many brokers or banks, you can register and create a demat account. After that, you can follow the above steps.

There are two major methods in which you can earn money in the stock market.

  • Firstly, buy a stock at a lower price and sell the same at a higher price. Easier said than done, as you would never know when the price is low or high even with the price-earning ratio calculated. The easier option is to invest in good-quality stocks of healthy companies and hold it for a longer tenure.
  • Secondly, if you hold onto shares, the companies might pay you dividends. They will first trace who the shareholders are either through NDSL or CSDL and deposit the dividend amount directly to your account.

Consider this example, you buy 100 shares of a company AS Technologies at INR 350 each. If the price of the shares were to reach INR 450, you would make a profit of INR 100 per share i.e. INR 10,000. If the company is doing well and they declare dividends at INR 10 per share, the company will deposit INR 1,000 for the shares that you hold.

In conclusion, the online stock market in India is greatly operated electronically, thus ensuring that you do not have to worry about how to buy and sell shares. Once you get the basic idea of how the share market works, all you have to do is simply follow the steps mentioned above. Even if buying or selling of shares or even if the stock market comes with inherent risks, the results in the form of potential returns are quite rewarding. Getting in touch with experts will not only help you to understand the best way to invest in the share market systematically, but also guide and ensure operational ease. Depending on your risk appetite and financial goal, financial experts will aid your share market investments for a healthy portfolio in the long run.

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