It must be difficult to figure out how to buy and sell shares online and make investments as a beginner to develop enough wealth for your retirement. Many individual investors have Demat accounts but are unsure of how to buy and sell stocks. India, with a history of more than 100 years and 7,000 publicly traded companies, is one of the world’s fastest-growing wealth management marketplaces. Furthermore, India has recently surpassed the United Kingdom and France to become the world’s fifth largest economy, and is on track to become the fourth largest private wealth market by 2028. This expansion of capital markets will be critical to the country’s economic prosperity. However, by worldwide measures, we are still far behind in terms of market capitalisation. Retail investor involvement in Indian capital markets is extremely low, with only about 3% of the country’s population investing in the stock market.
People must be taught the DIY (Do-it-yourself) approach of purchasing and selling shares in the stock market for the country’s economic progress, given the importance of retail participation in capital markets. It won’t be simple to do this, but you have to start somewhere. But first, let’s get a couple things straight:
When someone asks, “How can I buy and sell shares online ?” This question can be interpreted in two ways. To begin with, a person is a complete novice in the stock market and is unfamiliar with how to buy and sell stocks. Second, a person may have a Demat account and the financial understanding required to invest in the stock market, but he or she does not understand how to buy and sell shares to maximise their value. In other words, he’s seeking stock market advice or advice on how to pick the best stocks to invest in.
As a result, we’ll look at each scenario separately.
How to Buy and Sell Stocks on the Internet – A Beginner’s Guide
After gold and real estate, the stock market is one of the most popular investment opportunities for Indians. Investing in the stock market, despite its volatility, can help you make a lot of money. However, you must be willing to accept the significant risk of stock market investing. When it comes to investing in the stock market in India, people are always wary. The truth is that investing in equities can yield larger returns than investing in gold, silver, or any other financial instrument.
Furthermore, as previously said, capital markets are a critical component of a country’s economic development. As a result, you must learn how to buy and sell shares online using a Demat account. Once you’ve mastered that, you may experiment with the market in any way you choose.
We’ll go over how to buy and sell stocks for a newbie who is just getting started in the stock market.
To begin buying and selling stocks, you must first complete the following steps:
Step 1: Obtain your Permanent Account Number (PAN).
Are you in possession of your PAN card? – If not, you should get your PAN card as soon as possible. The Income Tax Department of India issues a PAN Card, which is a ten-character alphanumeric permanent account number that serves as an identifier and is issued in the form of a card. If you want to buy stocks on the internet, you’ll need a PAN card. Or, to put it another way, a PAN card is required for any financial transaction. You’ll need a PAN card not only if you want to invest in stocks, but also if you want to invest in mutual funds, FDs, PPFs, and RDs, or if you want to open a bank account.
Step 2: Locate a stockbroker.
It’s not necessary to go straight to the exchange or call the company whose shares you want to acquire once you have your PAN Card. Certain individuals, online agencies, and businesses are permitted to buy and sell shares on the principal market of the stock exchange. Brokers is a common moniker for them. The Securities and Exchange Board of India, a domestic market regulator, has registered and licenced these stockbrokers (SEBI). Stockbrokers charge a commission to help investors purchase and sell shares while acting as an intermediary between the share trader and the exchange.
When choosing a stockbroker, it’s crucial to consider the broker’s history, the broker’s cost, the commission charged, and the services it offers. Depending on your demands, you can select between full-time traditional brokers and discount brokers.
Step 3: Create a Depository and Trading Account
Now that you’ve decided on a stockbroker, it’s time to register a Demat and Trading account so you may buy and sell stocks. People used to yell orders on the floor of the exchange, but these days, anyone may buy and sell shares online through a stockbroker online. However, you will need to register a Demat and Trading account with your stockbroker in order to do so.
A Demat account is one in which your held shares are reflected in your portfolio, whereas a trading account allows you to purchase and sell shares or other securities in the market. For online trading, the shares you buy and sell are dematerialized.
The depositories that allow investors to open Demat and trading accounts through brokerage firms in India are the National Securities Depository Limited (NSDL) and the Central Securities Depository Limited (CDSL). The depository participant is the one who holds and releases the shares you buy and sell.
To open a Demat and trading account, you must first decide on which depositories you wish to use. Alternatively, you might simply choose the broker with whom you wish to register an account and learn about your depository participant later.
After that, you may fill out the account opening form and submit it along with copies of the appropriate papers and a passport-sized photograph to start a Demat account. After that, in-person verification will be performed, and the application will be completed if the verification is successful. After that, you’ll be given an account number and a client ID.
Step 4: Make a deposit into your account.
You must put money into your account now that you’ve setup your Demat and trading account in order to buy shares online. You can transfer money from your bank account using a variety of methods, including credit/debit cards, UPI, e-Wallets, PayPal, and bank transfers.
If you want to deposit more than 1 lakh rupees into your Demat Account, you’ll require a Unique Identification Number (UIN) to complete the transaction.
Step 5: Decide which stocks you wish to acquire.
If you’ve opened a Demat account and followed the steps above, you’ve made the decision to begin investing. Now it’s time to go into the stock market in search of the best stocks to invest in. One strategy to choose the best stocks to buy is to define your objectives. The goal of creating a portfolio should be determined. Beginner investors who want to buy and sell stocks should concentrate on their entire income, costs, and savings to maintain a steady flow of funds. Beginners are largely concerned with capital preservation and tend to invest in blue-chip firms’ stocks for safety reasons, as they are known for their consistent performance over time.
Small and mid-cap companies, on the other hand, are preferred by investors seeking capital appreciation. So, first decide on your objectives and risk tolerance. Don’t let the volatility impair your judgement; instead, start with a familiar industry. Any novice investor can become an informed investor by keeping up with current market developments, daily stock market developments, and business developments. Reading newspapers, using stock market web-platforms and apps, and watching news channels are all examples of passive study.
Being well-informed can aid you in conducting additional study and comprehending the foundations that drive a given business. A detailed study can assist in selecting the best stocks to purchase. The stock market has thousands of stocks, but with rigorous fundamental analysis, you will be left with only a few. DON’T FREAK OUT!!! Because your meticulous investigation will shortly bear fruit. Even if you don’t succeed, you’ll be able to reduce the chance of losing money.
See How to do a fundamental analysis of stocks in the Indian stock market for a better understanding of how to do a fundamental analysis of stocks in the stock market.
Step 6: Submit your Purchase Order
It’s time to place your order when you’ve decided on the stock. Make a decision on how many shares you wish to acquire to build your portfolio. Although it is entirely up to you as a beginner, it is recommended that you start modestly to get a sense for how buying individual shares works.
Choose an order type – market order, limit order, stop-loss order, or stop-limit order – while you’re at it.
Step 7: Submit a Sell Order
So you’ve made the decision to sell the stocks you’ve purchased. It could be because you’ve met the financial aim for which you bought the stock, or it could be because the stock has been declining for a long time and you don’t want to continue losing money. It makes no difference whether it is profitable or not! Right now, the most crucial thing for you to learn is how to sell stocks.
The most straightforward method is to use a market order to exit your investment at the current share price. Even yet, you may find up selling for a lower amount than you anticipated.
To ensure that you exit the position at a specific price, you might use a limit order or a stop-loss order. You can also specify how many shares you intend to sell. You’ll exit your position once the order is executed, and the profit or loss will be shown in your Demat account.
If you’re concerned and don’t feel like selling your stock, you can keep it in your portfolio for the long run. Furthermore, buy-and-hold investing is one of the most prevalent strategies used by many of the market’s most prominent investors.
I hope this has clarified the process of purchasing and selling stock on the stock market. We also hope that it will motivate you to increase retail involvement in the stock market in order to reinvigorate the country’s economic growth.