In today’s era everyone wants to invest their money in share market. Since the earning opportunities in share market are quite higher than the other mode of investing. But it is also a fact that ” Higher the risk higher will be the returns.” If you have the courage to take that the extra risk, then you can earn good returns. Today in this article, I have come up with beginner’s guide to invest in share market in India. So, let’s get started.
Some of the tips to invest in share market in India are:
- To survive in stock market you need to have great amount of knowledge about the market. It is rightly said by Warren Buffett,”Be fearful when others are greedy, and be greedy when others are fearful!”.
- Always properly research about the share or stock one is willing to buy before.
- Never invest in shares but in reality one should invest in business or the company and to invest in business you need to have proper understanding about the business.
Beginner’s Guide To Invest In Share Market In India?
Here I am with the important points that you need to consider while investing in share market in India. Let’s start the 6 golden rules beginner’s guide to invest in share market in India.
1. Get Your PAN Card
If you wish to start investing in share market in India then you must have your PAN (Permanent Account Number) Card. While entering in any kind of financial transaction, you will be asked to provide PAN card. Even when you approach bank for opening a saving account, banks asks to present your PAN card number.
PAN is basically a 10 digit Alpha – Numeric number which is allotted by Income Tax Department of India. With this card, IT Department gets access to your income and can calculate the amount of tax one needs to pay. So the primary document that you require to invest in share market in India is PAN Card Number.
2. Look For A Broker
Next golden rule for beginner’s guide to invest in share market is to find a broker. You cannot directly approach share market to invest in share market. In India, the stock market regulator is SEBI. So in order to buy and sell stocks or shares you will be requiring a SEBI recognized broker.
You will find that there are lots of peopple who are claiming to be broker. But let me tell you the brokers that are recognized by SEBI are listed in the official website. You can even refer for the recognized brokers from the SEBI (Securities Exchange Board of India) website. A number of online broker companies are ICICI Direct, Sharekhan, Indiabulls etc.
3. Get Your Demat and Trading Account
Once you have selected your broker or the brokerage company then your next step will be to open your Demat or trading account. In order to begin trading in stocks or shares you need to have your own personnel Demat or trading account. The Demat account holds all of your shares in electronic form.
Since we know that shares cannot be hold in a physical form hence to store the dematerialized state of stocks or shares you need Demat account. Now with your Demat account all the buying and selling activities will take place from your account. Usually your account will be taken care by your broker even if you approach them time to time or not.
4. Depository Participant
Depository Participant is an agent of the depository. It acts as an agent between the depository and the investors. Now the relationship between depository participant and depository is governed by an agreement which is signed between the parties under Depositories Act. In India there are two depositories namely NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).
Both of these depositories have their agents in the form of depositories participants. They provide you an account where you can hold all your stocks and share. This account is different from Demat and trading account. Well, the Demat account reflects the number of shares that you hold. While Trading account reflect the buying and selling that takes place in your account.
5. UID Is Required for BIG Investment
UID stands for Unique Identification Number also termed as Aadhaar Number. It is now must to invest in share market in India. Aadhar Card is a card which has 12 digit number. This number is required for those people who make transactions of more than 1,00,000 at once. While if your transaction limit doesn’t exceed 1,00,000 and beyond 1,00,000 then this number is not required for you.
6. Buying And Selling of Stocks
Last golden rule in beginner’s guide to invest in share market is buying and selling of stocks. All you need to contact your broker, and tell him the company and the number of share who want to sell or buy. Example, If you want to buy 10 shares of Nestle and the current price of per share of Nestle is Rs. 6740. But you ask your broker to buy the stock when its current price per share comes down to Rs. 6700.
You can place your request or order through customer care service number and it will be done on your behalf by your broker. Same is the case with selling of the shares. Your order request will be only valid for a day or will carry forwarded to the next day and your broker will inform you that. Furthermore if your order will get cancelled because the price doesn’t reaches the quoted price and you will have to place new order.