How To Invest In Share Market In India

Investing in Indian Share Market became the most popular investment platform among the Indian investors after “Dematerialisation” (DEMAT). In this guide I am sharing about “How to Start Investing in Indian share market?”.

However, if you or someone looking to invest in Share Market, few questions may click in your mind like – What is Share Market and how it Works? How to Invest in Share Market or Stock Market in India? or What are the assets or Financial Instruments being traded in Stock Market?

Well, here I am sharing a guide to start investing in Indian Share market.

In this guide I’ll be discussing step-by-step about, how to start Investing in Share Market in India?

So let us have a look at Share Market step-by-step guide to getting started being a beginner in Indian Stock Market. This guide will explain you getting started with Investing in Share Market in 7 simple steps:

  1. PAN Card
  2. Broker
  3. Trading Account
  4. Demat Account
  5. Depository Participant
  6. Stock Exchange
  7. Buying & Selling

1. PAN Card:

If any want to carry out any financial transaction in India the primary requirement is PAN or Permanent Account Number. Permanent Account Number is unique 10 digits Alpha-numeric number assigned to an individual by the Tax Authorities of India for assessing their tax liabilities.

Now a days PAN is required for opening a bank account, investing in Shares, mutual funds & other financial instruments, filling Income Tax returns etc.

So, the most and first thing you will require to be able to start investing in Shares in India is a PAN card, you have to get it first.

2. Broker:

You, me and any one else cannot directly go to the stock exchange for buying or selling stocks/shares.

If any one want to buy or sell the shares on share market that can be through only Brokers, because only Brokers are authorised to buy and sell the shares on Stock Market. Brokers are registered and licensed by SEBI (Securities and Exchanges Board of India). These Brokers can be an Individual or company (Online or Offline).

If you are comfortable with Internet better to choose online broker company to get easy access to Share Market.

3. Trading Account:

Once you have a broker, you will now need a Trading account. Trading account allows you to buy or sell shares through a Broker on Stock Exchange. Trading account will be like an intermediary between buyer & seller, who facilitates the buying and selling.

4. Demat Account:

When you apply for Trading account to a Broker, Trading account and Demat account will be opened simultaneously as it is one without the other is useless for investing in shares in India.

Demat account is just like a bank account. Bank account hold your money safely and keep all transactions record and here Demat account hold your Shares and these shares will reflect in Portfolio.

You cannot hold shares in physical form or store them physically after DEMAT introduction by SEBI. They have to be in Dematerialized state or Demat state as per existing rules by SEBI. A Demat account does that for you.

The buying and selling will takes place from Demat account and it will reflect in your Demat statements that you receive from Broker time to time.

5. Depository Participant:

There is also a Depositary Participant that you need to be aware of.

There are two depositories in India: NSDL and CDSL which stands for:

1. NSDL – National Securities Depository Limited

NSDL, the first and largest depository in India, established in August 1996 and promoted by institutions of national stature has established a state-of-the-art infrastructure that handles most of the securities held and settled in dematerialized form in the Indian capital market. (source –

2. CDSL – Central Depository Services Limited.

CDSL, facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry through its Depository Participants (DP). Central Depository Services Limited works for Bombay Stock Exchange and promoted by State Bank of India (SBI), Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Axis Bank and the Union Bank of India. (source –

These two have their agents in the form of Depository Participants who will provide an account to store the shares you hold.

It is not the same as Demat and Trading account as in Demat it shows the number shares you hold and the Trading reflects the buying and selling that has taken place in your account. Depository Participants will hold those shares you bought and release the shares you sold.

However, it is usually taken care of by your broker who will also guide you about the Demat, Trading account opening process as well as register with a Depository. But you need to be aware of it none-the-less.

6. Stock Exchange:

There are two main exchanges in India-

1. BSE – Bombay Stock Exchange

BSE was established in 1875, is Asia’s first & the Fastest Stock Exchange in world. Bombay Stock Exchange is operating from last 141 years since 1875 and facilitating the growth of the Indian corporate sector  by proving it an efficient capital-rising platform. Popularly known as BSE, the organisation was initially established as “The Native Share & Stock Brokers’ Association” in 1875. (source –

2. NSE – National Stock Exchange

The National Stock Exchange (NSE) is the leading stock exchange in India and the fourth largest in the world by equity trading volume in 2015, according to World Federation of Exchanges (WFE). It began operations in 1994 and is ranked as the largest stock exchange in India in terms of total and average daily turnover for equity shares every year since 1995, based on annual reports of SEBI. (source –

The buying and selling takes place in these two exchanges.

These are the only two exchanges in India where buying and selling of shares, commodities and other trading instruments take place. You need to mention the exchange to your broker too, as there is usually a slight difference in price of shares at the two exchanges.

However, your broker can guide you here in case you do not understand where and what to trade.

7. Buying and Selling:

For buying or selling shares, you need to inform your broker about which share in what quantity you wish to buy and at what price.

For example if you wish to buy 10 shares of State Bank of India when it reaches a price of Rs. 294, you have to inform the same to you broker; Share: State Bank of India. Quantity: 100, Price: 294.

In case of online broker too you have to inform your broker for buying and selling, they usually have customer care numbers where you can place your order if you do not have access to the Internet at that point. Transaction will be made on your behalf, when the share reaches that price.

Same is done in case of selling, for example Sell: State Bank of India, Quantity: 20, Price: 296. The sell order will be processed when the share reaches that price.

However the buy and sell orders remain valid only up to a certain time, usually the same day or the next. Your broker will inform you for the same. If during that time frame the buy or sell price is not reached, the order is cancelled and you need to place a new order.

Thank You for reading.