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How to Start Investing in the Indian Stock Market?

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To invest in the Indian stock market, there are several preconditions that we would like to mention first. Here are a few things you will need to invest in the stock market:

  1. Bank Savings account
  2. Trading and Demat account
  3. Computer/laptop/mobile
  4. Internet connection

For opening a demat and trading account (usually opened altogether and called 2-in-1 account), the following documents are required:

  • PAN Card
  • Aadhar card (for address verification)
  • Canceled cheque/Bank Statement/Passbook
  • Passport size photos

You can have your savings account at any public or private bank in India.

Difference Between Trading and Investing In Stock Market

After all documents are submitted, DP will verify the provided details and then provide you with login details. With this data, you can log into your account and start trading. You can choose from two different strategies:

  1. Trading:

In this strategy, you will aim to convert short-term price movements into profits. This strategy is mainly practiced by day traders who liquidate all of their positions at the end of the day at less price fluctuations.

  1. Investing:

Unlike trading, investing means holding positions for a long time. The goal here is to identify undervalued companies, buy their shares, and maintain their place in them during the temporary ups and downs of the market.

Apart from Demat and a trading account, there is another term that you should know before you start trading in the stock market, this is the margin participant, and there are two storage conditions in the country:

  1. NSDL – National Securities Depository Limited 
  2. CDSL – Central Depository Services Limited 

Both custody services offer custodian members to hold their shares. While the deposit member is similar to your Demat account, it is not the same.

The Demat account shows how many shares you have, the trading account shows the buy / sell transactions that have been made in your account. The Custodian is the place where the shares you bought and sold are kept.

Most brokers register you as a margin participant when opening a Demat account and trading.

List of Stock Exchanges 

1. BSE Ltd.

  1. Equity
  2. Equity Derivatives
  3. Currency Derivatives (including Interest Rate Derivatives)
  4. Commodity Derivatives
  5. Debt

2. Calcutta Stock Exchange Ltd.

3. India International Exchange (India INX)

  1. Equity Derivatives (Equity Index Derivatives & Single Stock Derivatives)
  2. Commodity Derivatives
  3. Currency Derivatives
  4. Debt

4. Indian Commodity Exchange Limited

  1. Commodity Derivatives

5. Metropolitan Stock Exchange of India Ltd.

  1. Equity
  2. Equity Derivatives
  3. Currency Derivatives (including Interest Rate Futures)
  4. Debt

6. Multi Commodity Exchange of India Ltd.

  1. Commodity Derivatives

7. National Commodity & Derivatives Exchange Ltd.

  1. Commodity Derivatives

8. National Stock Exchange of India Ltd.

  1. Equity
  2. Equity Derivatives
  3. Currency Derivatives (including Interest Rate Derivatives)
  4. Commodity Derivatives
  5. Debt

9. NSE IFSC Ltd.

  1. Equity Derivatives (Equity Index Derivatives & Single Stock Derivatives)
  2. Currency Derivatives
  3. Commodity Derivatives
  4. Debt Securities (Masala Bonds)

The BSE and NSE

Most of the trading on the Indian Stock Exchange takes place on two stock exchanges in the country: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has existed since 1875. It was founded in 1992 and started trading in 1994; however, both exchanges use the same trading mechanism, trading hours, and payment process.

What is the minimum age to invest in the Indian stock markets?

Hence, there is no age limit for investing in the Indian stock market. You must be only 18 years old or older to create a Demat account and a business account. To open a Demat account and a merchant account, you must have a PAN card and can only apply for a PAN card if you are 18 or older.

Investing in the stock market for minors/under 18 years of age

Even if you are under 18, you can open Demat account and a business account. You can do this by sending documents to your tutor.

You can open a Demat account and a brokerage business account as a minor with a natural guardian (such as a parent) or a court-appointed guardian. Once all required paperwork has been verified, a Margin Membership will allow you to trade the Indian Stock Market.

Steps to start investing in the stock market

Recognize your Investment Requisites:

Before you start trading the stock market, you need to understand the requirements and investment objectives, and you also need to calculate how much to invest at what rate, but if you are a beginner, start with a small amount. Also, you should only invest in stocks that you are comfortable with losing. First, subtract your expenses and debentures from your income, the remainder is your investment surplus. In addition, you need to set aside a little money for retirement plans, insurance and the Emergency Fund: the rest you can invest in stocks and other investment vehicles.

Analyze Investment Tactics:

Once you understand the investment opportunity, investors need to analyze the stock market scenario in order to plan the best investment strategy, everyone needs to identify stocks that suit their needs, for example, investors who want more returns should invest in dividend-paying stocks. this is the right choice. Also, for investors looking to raise capital, picking growth stocks is a suitable strategy.

Make Investment at Right Time:

Investing at the right time is one of the most basic and important strategies that investors often overlook. Buying certain stocks at the lowest price increases the potential return that investors can get favorable prices.

Place the BUY/SELL Order:

Nowadays, most of the merchants are online. Make sure you understand the trading instrument the broker has provided you and submit a trade request with the correct price and quantity. Your broker will also give you a free guide on how to invest in the stock market. On the other hand, if you want to do day trading, you should add your target price and stop loss and make sure you select these levels before buying the stock.

Monitor the Portfolio:

It is important for every investor to monitor their portfolio to make sure their initial decisions remain correct. The stock market is really huge and practically changes every second. You need to analyze your portfolio in order to reduce potential losses and increase profits. This does not mean that you have to react to every price change, but you have to be aware of the most important trends in the market.

With these basic strategies, you can easily start your investment journey with confidence. You can achieve success if you maintain discipline in the implementation of your investment strategy and the desire to learn something new every day.

Some Other Important Dos and Don’ts

Dos

  • Start with little capital in the early days 
  • Use a demo trading account to improve trading accuracy 
  • Always have a stop loss and target price entering a trade. 
  • Learn technical analysis and the basics if you want to be a stock trader / investor 
  • Diversify your investments. if you have long-term investment goals 
  • Try to study the financial statements of companies

Don’ts

  • Don’t trade news stocks for good or bad reasons 
  • Stay away from outside advice 
  • Never invest the money you need 
  • Newbies should avoid IPOs 
  • Don’t get attached to stocks emotionally 
  • Don’t try to buy market time
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