Share Market trading is popular among people because investing has shifted from offline to online. There are many videos, blogs, and tutorials to help investors understand what Share Market today is. However, before investing, people should understand how to invest.
Anyone wanting to purchase shares in the market should know a few concepts before making the final purchase. If you consider buying shares online, then this process helps your investment journey.
Steps to invest
Open a Demat and Trading Account
You should open a Demat and Trading Account for trading in the market. However, there are a few concepts to clarify. There are two depositories in India, National Securities Depository Ltd, and Central Depository Services Ltd. There are multiple agents registered with these depositories, which are depository participants. You can open a Demat Account online with any DP.
Trading Accounts should be linked with Demats for a smooth trading mechanism. Trading Accounts are where the selling and purchasing of shares happen. The account is where you place the order with the exchange, and the exchange’s order-matching mechanism settles the order. The Trading Account should be opened with a SEBI-registered broker.
The crux of deciding how to invest is to research the shares. Information about listed companies is readily available online through their websites, newspaper articles, portal and broker analysis, stock exchange filings, etc. You should analyse the company’s financials, check financial and operational ratios, do peer analysis, etc. When you make investments, calls based on solid research ensure no external forces are misleading.
Apply for IPOs through Demat
If you decide to invest in Initial Public Offerings, you can do it through your Demat Account. You need to enter the lot numbers and the prices at which you want to make a bid for the IPO. Once the shares are listed, you can exit the shares at a profit.
Make trades through Trading Accounts
You can purchase shares on the Sensex index through Trading Account. The exchange has its order matching mechanism for matching orders. To make a purchase, select the company whose shares you want to buy, enter the quantity, and then enter the buy price. The orders are settled on a T+2 basis, where the settlement happens two days after the transaction date.
Delivery basis or Intraday Trading
Whenever you make a purchase, you should decide between a delivery trade or Intraday Trading. Intraday should be squared off on the same day. These trades are made using credit from the broker through the Margin Account. On the other hand, Delivery Trading can be short- or long-term, where the shares are credited to the Demat Account.