People love to make money from speculation and the entering the share market is a great way of investing money and reaping benefits later on. You can be a small or a big investor, but your main aim would be to buy stocks when the prices are low and sell them when they move up. Even though there are inherent risks in share trading like all other speculative markets, you need to know the basics of how to enter or start in the stock market before venturing in.
Open a Demat Account
There are two major stock exchanges in India for buying and selling shares online, the BSE and the NSE, where shares are traded and are favored by investors. They are two major stock exchanges with high volumes traded in a single day enabling investors to book profits as well as hold on to shares for some time to allow a price appreciation.
Shares are bought and sold by approved brokers who are enlisted with the major stock exchanges.
Your primary task would be to check out a bank that has a demat account facility and open an account.
You can open a savings cum demat account with a minimum deposit of Rs10, 000 and opt for either online trading with the help of the bank or enlist with a broker. Filling out the form is simple and easy and you need to provide some basic information as well as your identity proof. Instead of piled up shares on paper, your demat account will show your holdings at any given point of time.
Online facilities for share trading are offered by banks that also double up as brokers and there are a few major banks in India like ICICI, UTI, and HDFC among others that allow buying and selling shares online.
Compared to brokers, banks will charge you less in fees and commission as they would be directly dealing in the stock exchange. Private brokers will be charging their commission and you would also have to pay extras charges to the bank. You can log in and all online transactions will be carried out by the bank.
Check the sector where share prices are rallying
You need to select the type of shares you want to trade in. You can go for sector wise trading like concentrating on pharmaceutical stocks when they are rallying or auto shares when there is a boom in the sector or any other industry that is doing well.
Your primary would be to cash in on the boom in the market and make profits before the stock price reaches a high and then drops in value.
With banks as well as brokers, you would have to keep margin money on the basis of which you can trade. You could be allowed 10 or even 20 times of the margin money for day trading which is buying and selling shares on the same day. For taking delivery of the shares for sale at a later date when the price appreciates, you would have to keep sufficient balance in your savings account for the bank to debit the amount.
Your demat account will reflect your holdings regularly for you to check them anytime you want. Tax is debited by the bank on the basis of profits you make from transactions and by the end of the accounting year each March end; your bank will provide you with a statement for the deduction. While buying, look for the 52 week low price and sell when you have made a sufficient profit instead of waiting for the price to go up further as it may crash suddenly.
