How to invest in the stock market?

Investing in stocks means buying shares of ownership in a publicly listed company. By purchasing the company’s stock, which consists of those shares, you are betting on the company’s long-term success and growth. As a result, other investors could be eager to purchase your shares from you for a higher price than you originally paid. That implies that if you choose to sell them, you could make money.

The stock market is a long-term endeavour. The best course of action is to maintain your investing position despite market ups and downs and to diversify your portfolio. Depositing funds into an online investment account, which can later be used to purchase shares of stock or stock mutual funds, is one of the greatest ways for beginners to learn how to invest in stocks.

You can open a brokerage account and begin investing for the cost of one share in many cases. Some brokers also provide paper trading, which enables you to practise buying and selling stocks using stock market simulators prior to making a real-money investment.

What are the types of Share Markets?

The Primary Share Market and the Secondary Share Market are the two categories of share marketplaces that you can trade in.

Primary Share Market: A company relies on it to register in order to issue shares and raise capital. This platform can be used to reserve space for stocks on the stock exchange list. A company primarily joins the primary share market to raise money by selling its shares in an IPO to the general public.

Secondary Share Market: The secondary share market is where corporations can trade new securities they have acquired from the primary market. Investors have the opportunity to sell their purchased shares through these trades. Investors engage in transactions on the secondary stock market where one sells and the other purchases at the going market price or a price agreed upon by the parties. Brokers or other middlemen are typically involved in Secondary Share Market trades.

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Procedure to invest in different share market

Investing in Primary Share Markets:

A Demat Account is required if you want to invest in both the primary and secondary share markets. The electronic copies of the shares you trade will be stored in a DEMAT Account. You need a Trading Account in addition to a DEMAT Account in order to be able to purchase and sell shares on the market.

The number of shares you receive if you invest in an initial public offering (IPO) of a company will depend on how the market reacts. Following receipt of all applications for participation in the IPO, the company evaluates the demand for and supply of shares. The allocation of shares to the traders is determined by the stock’s availability. Through a net-banking account, it is simple to apply to invest in an IPO.

Through a net-banking procedure called Application Supported by Blocked Amount (ASBA), you can quickly apply to invest in an IPO.

If you decide to buy shares through this process for Rs. 5 lakh, the money will go toward the IPO. The exact amount needed to cover the shares that are allotted to you is debited from the company at the time of allocation. However, your account gets credited with the remaining amount. Within a week of the shares being allocated, they are listed on the stock exchange and you can start trading with them.

Investing in Secondary Share Markets:

You require a DEMAT and Trading Account in order to invest in the secondary share market, just like primary share markets. To enable seamless transactions, both accounts should be connected to a bank account.

Logging into your trading account and selecting the shares you want to sell or purchase are the following steps. If you are buying shares, make sure you have the cash available to complete the deal. Additionally, be sure you have chosen the right amount of shares before selling any.

After this, you must choose the price at which the shares will be purchased and sold. Then you will receive a response from the buyer or seller. Once the funds or shares have been transferred and you have received the requisite shares/money in exchange.

Prior To Investing in Stocks: Important Considerations

Investment Purpose

 You must first decide what your financial objectives are if you’re wondering How to Start Investing in the Stock Market in India or any other investing option. The investing purpose is not constant and changes depending on the investor.

Diversification

You can reduce risks by creating a diverse portfolio. In other words, the smaller the financial risk connected with your investments, the more evenly distributed your investments are throughout various industries.

Risk Tolerance

Your risk tolerance is a crucial issue to consider when investing in stocks. Defensive stocks that offer predictable returns and are less affected by market volatility may be an option for investors with modest risk appetites. The FMCG sector is considered as one of the defensive stock sectors because of the regular income of the company.

Now that you are aware of how to begin investing in shares in India or on the internet, open a DEMAT account with the broker of your choice and carry out the procedures outlined above to begin investing. Additionally, keep in mind the different crucial elements while selecting the stocks to include in your portfolio for better results.

 

About the Author

Ketan Sonalkar (SEBI Rgn No INA000011255)

Ketan Sonalkar is a certified SEBI registered investment advisor and head of research at Univest. He is one of the finest financial trainers, with a track record of having trained more than 2000 people in offline and online models. He serves as a consultant advisor to leading fintech and financial data firms. He has over 15 years of working experience in the finance field. He runs Advisory Services for Direct Equities and Personal Finance Transformation.

Note – This channel is for educational and training purpose only & any stock mentioned here should not be taken as a tip/recommendation/advice

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