How To invest In Stock Market in India 2024 – A Complete Beginners Guide

7 minutes read

Whenever someone thinks about making investments, stock market is something that they will come across.  Stock market is undoubtedly one of the best options to invest your money and make a profit out of it. Even at the same time stock market is full of risk. However, if you have never invested a single rupee in stock market and you are planning to invest. Then you must be having this question how to invest in stock market in India?

Investing in the stock market is not a tough job to do, to be honest. But you have to do proper research before you start investing your money in the stock market.

However, to help you out I am going to share a how to invest in stock market in India guide. But before that, let’s talk about how stock market works.

So let’s just head into the topic without wasting much of the time:

How Does Stock Market Work?

Before I answer how to invest in stock market in India, I think knowing how does stock market work would be a good idea.

Well, a stock is a unit of holding rights in a company. Whenever a company decides to jump in to share market, the company’s share gets split into a number of shares. Also, the possessor of a share owns a small percentage of a company.

And when you purchase a share or stock of a company it simply means you are buying a unit holding right from the company. Also, the stocks stand for a company’s earnings.

Now when you purchase a number of shares from a company, this simply means your rights in the company is much stronger. Also, you are going to get much higher profits if the company performs well.

The shares of a company launch in the market as the “Initial public offering” or IPO. Also, the price of the IPO gets decided on how much the company is estimated to be worth and how many shares are being issued.

You can split the stock market into two main sections. These sections are the:

Primary Market:

In Primary market, the new shares are first sold through the IPO. Most of the institutional investors purchase most of the stocks from the investment banks.

Secondary Market:

On the other hand, there is the secondary market where all the trading goes to the people like you and me. As well as the institutional investors also use the secondary market to make their investments.

Now lets talk about our main question which is how to invest in stock market in India?

How to invest in stock market in India?

Now let me talk about each of these steps one by one:

1. Get a PAN Cardpan card

PAN card or Permanent Account Number is one of the most important documents that you will need before you make your first investment. It is a unique 10 digit code which gets assigned to an individual by tax authorities. So they can access their tax liabilities.

Even nowadays, PAN is extremely important for opening a bank account, investing in mutual funds or filing income returns. So it is important for you to get a PAN card. Also, creating a PAN card is not a tough deal. You can easily do it by going to the NSDL Website.

2. Get a Broker


You cannot simply go ahead and start investing in the stock market. Instead, you have to take help from an authorized agency to get done with the whole process. And these authority agencies are known as brokers.

Brokers can be individuals or companies. Even nowadays, there are quite a lot of online websites are available that are acting as a broker. Some of these online companies are the ICICI Direct, Sharekhan, Kotak Securities, Indiabulls and so on.

However, before you select any broker for the job just make sure they are licensed by SEBI or Securities and Exchanges Board of India (SEBI regulates the share markets).

Get a broker, they can be individuals you know and are reliable, or you can approach various companies that are licensed to trade and deal in securities in the markets.

3. Get a Demat and Trading Account

Demat and Trading Account

Next, you have to get a demat and trading account. After you get yourself a broker the next step is to create these two accounts. However, in most of the cases, your broker will help you to get done with these things.

A demat account will be used for holding the stocks or shares in your name. Since it is not possible to hold the shares in the physical form or store them. That is why you will need a demat account.

On the other hand, the stock market will handle all the buying and selling shares job. A trading account will be like an intermediary that lets you buy and sell your shares.

4. Depository Participant

Before you start investing your money in the stock market, you also need to be aware of the Depositary Participant. There are two depositories are available in India which is the NSDL and CDSL.

These stands for National Securities Depository Limited and Central Depository Services limited. These two have their agents in the form of Depository Participants who will provide you an account so you can store the shares that you have purchased.

However, it is not the as same thing as a demat account. In demat it will display the number of shares that you have purchased and a trading account will display all the buying and selling activities.

But, the Depository Participants will hold the shares that you have bought and released the shares that you have sold. Although, the whole thing will be taken care by the broker. But it is a good idea to be aware of this thing as well.

5. UIN if you want to invest BIG

If you are someone who is planning to invest in big numbers. Then you have to get UIN or Unique Identification Number. UIN is required if you trade for more than Rs. 1,00,000 at a single time. However, if you are a regular investor then you do need to bother yourself about the UIN at all.

6. Buying and Selling

In the end, let’s talk about the buying and selling thing. Well to buy any shares or sell them you have to inform your broker about it, and they will process the same.

For example, if you want to buy 5 shares of TATAMOTORS when it reaches a price of Rs.300, then you have to inform your broker about it. Even if you are using an online broker, they will provide you a helpline for the same.

Also, this is the same care when you plan to sell your shares. Also, if your broker offers a trading software. Then you can also do the same by using the software where you can see the whole process by yourself. As well as keep an eye on the market.

The buying and selling take place in two exchanges: BSE and NSE. These two stands for “Bombay Stock Exchange” and “National Stock Exchange.” These are only two exchanges available in India where buying and selling of shares and commodities happens.

Hence while you ask your broker to make a purchase or do it via a trading software, you need to keep an eye after it.

So that was a answer to your how to invest in stock market in India question. If you have any more questions regarding stock market for beginners. Then do feel free to let me know by dropping a comment below.

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