The Procedure for buying Shares through a Demat Account
The stock market and share trading are the two most-talked topics in India. People want to trade in stocks, but they have a fear of losing money.
Experts say that it is not a market of speculations as many people think. Instead, it is a market based on thorough financial concepts.
By understanding the trends, one can make a fairly accurate assumption about the ups and downs in the market.
A long-term perspective is always better than day trading.
With the introduction of Demat in India, there has been an enormous increase in the number of people trading in the stock market.
The digitization made share trading, brokerage calculation and account settlement simple.
Before you start trading, it is significant to open a Demat account if you haven’t opened so far. After opening the Demat account, you can source a broker to facilitate in the share trading.
Nowadays, all brokers offer an online platform that makes the things amazingly convenient.
The blog tells about share trading using the Demat account in detail.
Get the PAN Card first
Getting Permanent Account Number or PAN in India is easy.It is the basic requirement for performing any financial transaction.
Nowadays it is mandatory to have the PAN. You need to apply for it with the supporting documents. The Department of Finance will allot the number, and a card is issued in the name of the cardholder.
Open a Demat account
Once you get the PAN, open a Demat account. Either fill the online form and send the supporting documents in the digitized form or fill in the physical form and attach attested documents.
You need to give the application form to the brokerage company you want to transact with. Once the documents are verified, you get Demat account.
It can be used for buying and selling stocks, mutual funds, and derivatives.
Depository Participant or DP is an agency that stores the shares that you hold. NSDL and CDSL are two depository participants in India. They issue a unique identification number to every investor.
Choose the broker
Usually, the same broker gives you a trading account who opens the Demat account.
The share broker is certified and authorized by the Security Exchange Board of India or SEBI to act as a broker. SEBI issues a license and unique identification number to the broker.
He is the intermediary between the trader and the stockbroking firm. He charges a small amount as the brokerage for every transaction; sell or purchase.
Buying and selling shares
Once you open Demat account and link it with the trading account, you can buy or sell stocks online. You can also do it by giving instructions to the broker over phone.
Shares bought and sold on the same trading day is called intraday trading. Shares that you hold and sell on a trading day later is called delivery trading. The brokerage for intraday trading is less than the delivery trading.
Brokerage is calculated and deducted online in the profit or loss incurred by you. If you don’t have balance in the trading account, then you need to replenish it to trade further.