How to Invest in the Share Market in India?

When it comes to investing in the share market in India, it’s not just about finding the best shares to buy in India. Before you can invest money in the share market in India, you need to do the following:

How To Invest in the Share Market in India: Things To Know Before You Start Investing

Get a PAN or Aadhar card

In order to invest in the share market in India, investors have to have a PAN card or an Aadhaar card. Whenever an investor wants to open an account with the Securities and Exchange Board of India (SEBI), which is the market regulator, he/she needs to complete a Know Your Customer (KYC) procedure. Investors will also need to furnish a six month bank statement and submit a cancelled cheque along with it. These rules were added as a part of the Government of India’s new regulations on opening a demat account and investing in the stock market.

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Get a broker

Whenever you want to invest in the stock market, you can’t just directly go to the stock market and start buying and selling stocks. That process can only be done with the help of designated stock brokers. Brokers can be individuals, companies or agencies that have been authorised by the SEBI to trade in the stock exchanges of India. Every time a broker carries out a trade for you (buying or selling), they charge a percentage of the trade value as commission. That commission is known as “brokerage”.

Get a demat account

After you have got yourself a broker (individual, company or agency), your next step towards investing in the share market in India is to get yourself a demat and trading account. A demat account does the job of holding the stocks that you have purchased and it will reflect them in your name. The word “demat” means “dematerialized” as shares can’t be held on a physical form and they are stored in a demat account in their dematerialized form.

Are stocks the easiest way to build wealth?

The stock exchange has fascinated people for over a century now. Stocks are even seen by many as the quickest way to get rich. However, there are indeed only a few investors who see the stock exchange and stocks using the right perspective. To most, these are just tickers of prices going up and down. If your ticker goes up, you make money. If it goes down, you lose. That’s both the start and the end of the story. Just finding the best shares to buy in India is not enough. You need to do more than that.

The thoughtful investor is very discerning. He/she looks at stocks not even as quotes rising and down, but as real, live businesses in action. Go one step further and one realizes that stocks are often among the very best asset classes to take a position in. They are a vehicle and mechanism that provides ordinary individual investors with some amazing advantages and opportunities. Advantages that are unparalleled by just about any other asset class.

Are stocks the easiest way to build wealth?

If you want to know which are the best stocks to buy in India, you must be interested in investing in the stock market. Here are six reasons why you should start investing in stocks as soon as possible:

Opportunity to have an existing business

Once you buy a stock, you get to shop for a stake in an already existing business with the large advantage that business already has all its employees and infrastructure in place, and is already up and running. You straightaway get a claim on the business’ future profits (in your proportion of ownership) without any of the headache or effort involved in running it.


When you buy stocks, you can immediately sell them to generate cash flow. Doing so is as easy as making one call or clicking a few times with your mouse.

An astounding number of choices

You’ll buy as long as you actually like something. It would be a truism to say that you will try to find the most profitable business being sold at the cheapest price. But the point is that the stock market puts you in a position where it enables you to make such a choice.

Little money required

Think about this. Even if you feel like opening a tiny grocery store down the street, you’ll need to stake a considerable amount of cash on the success of only one venture that may or may not take off as planned. Compare this to purchasing a stake within a successful business within the stock exchange. You can get a piece of the action with even just a few hundred rupees, let alone lakhs and crores.

No hassles of negotiations and brokerage

With stocks, the price is right there for you to see. No hassles of negotiating with the opposite party. The brokerage is typically pretty low too (usually a maximum of 0.5%). This helps ensure that a substantial part of your investment is not eaten up by frictional costs.

The prospect of a higher return

One thing at the very core of choosing to run a business instead of investing your money in a bank fixed deposits the expectation of higher returns on your investment. Thus, businesses usually strive to earn returns much above your run-of-the-mill investments. The trick is to buy a stock that has shown that it can accomplish the above with reasonable certainty, and to buy it at a good price.

But is the stock exchange an honest Place to take a position These Days? The stock market is like a maze. You need a blueprint to navigate it successfully. Without a blueprint in hand, investors must rely on hearsay. Usually, from other uninformed investors. It’s a case of blind leading the blind! And none of them even recognize they’re lost.

When it comes to investing in the stock market, that is definitely one of the worst ways to do it. And you don’t have to do it this way, there are better ways.

You must first find a successful, tried-and-tested blueprint for stock investing. Spend some time understanding this blueprint. Then, and only then, take the plunge.

You need to know what to do. You need to know how to do it. You need to know when to do it. Only then can you expect to make money in the market, and keep it too.

What are some basic things to know before investing in the share market in India?

Investing: All is in the process

With the Indian stock exchanges at their volatile best (or worst), these are indeed difficult times for investors. At every rise, participants take the chance to book profits, with the prevailing sentiment being so far apprehensive. In such times, what might be the simplest strategy to use as a long-term investor?

The process of investing should have some hard and fast rules. If you follow a disciplined process of investing, you’ll accumulate significant wealth over the long-term.

Assess the time horizon – are you a trader or an investor?

If you’re an investor, do you possess the patience along with the ability to keep your emotions in check?

Have you done the required amount of research and studied the stocks that you are planning to invest money in?

The above is an indicative process to use while going about investing in equities. It’s necessary to take a position consistent with a disciplined process, and this is often the simplest method to make money in any market, bull or bear, across economic and market cycles.

What are the factors that longer-term investors must check out while taking an investment decision?

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Business model

Undoubtedly, the very very first thing that any investor must check out is that the business/sector that the corporate operates in.


The management is another extremely important factor to think about before investing in any company. At the top of the day, it is the management that will be the driving force behind the future direction and success (or failure) of the company.

Competition in the industry

The company’s competition is another major factor that you simply as an investor should check out before deciding to shop for (or to not buy) that company’s stock.

Financial analysis

This, of course, is one of the major factors that most investors already look at. It includes doing an in depth study about the company’s financial position and performance over a fairly long period of your time. Such a study is usually referred to as ‘fundamental analysis’.

Dividend yield

Dividends are a sort of income from shares and regular dividend-paying companies do provide some comfort as long as their profits and cash flows are stable enough for them to stay paying dividends each year.


And finally, the last step in deciding whether or not to buy a stock – the valuation phase. While the business model, management, fundamentals, and market positioning of the company may be the best, if the stock is trading at valuations that are unwarranted, then it is not worth buying the stock.

At the end of the day, most seasoned share market investors will agree that investing in shares is all about conviction – if you’re not convinced about the corporate, then don’t stake your hard-earned money.

Where to get info on Share Markets in India?

You have probably received stock tips and proposals from your brokers, friends, and family. When asked about the reason behind the decision, the person usually cites some “reliable” source. Investors make decisions based on certain factual information. Subsequently, they make future assumptions based on, and in support of, those facts. As such, knowing how an industry and a corporation functions is extremely important. In addition, it’s equally important to acquire such information from proper and reliable sources.

Here’s a basic idea of where you’ll set about trying to find information on companies you would like to take a position in:

Offer documents

One of the simplest sources for understanding a specific sector or industry is the offer document furnished by the company. As all the disclaimers in the ads say, please read the offer documents carefully before investing.

Annual reports

Just in case you can’t get a hold of the company’s offer document, as long as the company has been listed on the stock exchanges for long, the annual report can come in really handy.

BSE/NSE announcements and company press releases

Aside from annual reports, it’s the official company documents like press releases, announcements, and presentations which are released in regular intervals. The source for such information are the BSE or NSE websites along with the company’s website.

Business dailies and other media

Newspapers and news channels are an excellent medium for gaining updates on companies. Interviews with management provide good information on the company’s views, plans and strategies.

How can you keep your wealth intact?

There are a lot of asset classes that can help people protect and build on their wealth. Of course, it should be as per the investor’s risk appetite. Here are the types of stocks you should use:


It’s always good to keep some cash in hand so that you can buy good bargain stock in the event of a market collapse. Investors should keep anywhere between 10-40% of their investment portfolio in cash.


Gold is a great insurance policy for those times when the market goes bust. Have at least 5% of your assets invested in gold.


Clearly, there’s no bigger relief than watching the roof over our heads become debt free. So try to invest a little bit in property as well.


Bonds are a great financial tool to protect your wealth against inflation to earn a fixed rate of return. You can get assured returns with almost negligible risk.

Safe stocks

Safe stocks are stocks that have strong fundamentals and capable management. Hence they usually perform well.

So as you might have seen by now, investing in the Indian share market is not as simple as typing “best stocks to buy in India” on the Google search bar and starting investing immediately. Follow the tips shared in this post and do the required research. Happy investing!

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