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In Beginner's Guide

How to Invest in Stock Market Online?

December 19, 2020 6 Mins Read
Home > How to Invest in Stock Market Online?
How to Invest in Stock Market Online
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How to Invest in Stock Market Online? [ Beginner’s Guide ]:

Most of the people are involving in investing in the stock market and for the people who wanted to make higher returns on their investments can choose the stock market as the platform of investments.

In Stock market there have been a quite wide range of investment securities where the investments can be made.

From this article on “How to Invest in Stock Market Online?” will give you the guidance for starting your investment in the Stock Market Online.

Firstly, let’s understand “What are Shares?”

Table of Contents

  • What is Share?
  • Different Types of Shares:
    • 1. Preference Shares
    • 2. Equity Shares
  • What are the Steps required to buy a Share Online?
    • 1.  Getting a PAN card
    • 2.  Open a Demat Account
    • 3.  Open a Trading Account:
    • 4.  Register with a Broker/ Brokerage Platform:
    • 5.  You’ll also need a Bank Account:
  • 6. Get your Unique Identification Number (UIN):
      • About Us

What is Share?

A share could be a single unit of possession in a company or financial asset.

It is primarily an exchangeable piece valuable of an organization which may fluctuate up or down, reckoning on many completely different market factors.

Companies divide capital into shares as a method of raising capital.

Shares also are called stocks.

There are 2 main sorts of shares: common stock and preferred stock.

Ordinary shareholders have the voting rights and receive dividends as per profit levels.

Whereas preferred shareholders don’t typically have the voting rights however they have priority within the payment of dividends.

The price of a share that any of the company issues depends on its face value – the capital of an organization divided by the whole numbers of shares.

A firm’s authorized capital refers to the most quantity in shares it’s allowed to sell.

People who own shares during in a company are known as shareholders or stockholders.

Shareholders receive financial gain from the shares they own on a routine basis – these are known as dividend payments.

So, this was about the description about the meaning of shares in the stock market.

Different Types of Shares:

1. Preference Shares

  • Cumulative Preference Shares
  • Non-Cumulative Preference Shares
  • Participating Preference Shares
  • Non-Participating Preference Shares
  • Convertible Preference Shares
  • Non-Convertible Preference Shares
  • Redeemable Preference Shares
  • Irredeemable Preference Shares

2. Equity Shares

Now, let’s start with the procedure to understand the investment pattern to make it in Online.

What are the Steps required to buy a Share Online?

Starting with,

1.  Getting a PAN card

Obtaining a Permanent Account Number (PAN) is the first step towards any trade in the stock markets. According to government regulations, you have to provide your PAN before making any financial transactions.

PAN is a 10-digit unique alphanumeric number allotted to you. A PAN card also acts as a valid identity proof. PAN is used by the government to assess your tax liability.

2.  Open a Demat Account

Before purchasing shares online, you have to compulsorily open a Demat Account.

  • A Demat account is also known as a Dematerialized account. Here, the physical shares held by you are dematerialized or converted in an electronic format.
  • Once you open an online Demat Account, you will be provided with your unique Demat Account number. This number has to be quoted while buying or selling shares.
  • A Demat Account is quite similar to your bank account, where you have the option to deposit and withdraw money. The number of shares purchased or sold is accordingly credited or debited in your account.
  • Here, you must remember that you can only open a Demat Account with a Depository Participant (DP). A DP can either be registered with National Securities Depository Limited (NSDL) or Central Securities Depositories Limited (CSDL), or both.

3.  Open a Trading Account:

The next step is to open a Trading Account.

  • A trading account is used to purchase and sell shares in stock markets. Once you have a Demat Account, and want to purchase shares online, you need a Trading Account.
  • While purchasing shares online, you have to quote your unique Trading Account number.

4.  Register with a Broker/ Brokerage Platform:

  • As you cannot purchase shares directly from stock markets, you have to use the services of a broker. A broker is a financial intermediary, acting as the link between you and the stock market. Market regulator, Securities Exchange Board of India (SEBI) certifies brokers in India.

5.  You’ll also need a Bank Account:

  • You cannot purchase shares online without having a bank account. Your Trading Account links your Demat Account with your bank account.
  • If you want to purchase online shares, then you have to make the requisite order through your Trading Account.
  • The broker will then forward the transaction for settlement in the stock exchange. Post settlement, the shares will be transferred to your Demat Account within two working days, while the necessary charges, or purchase costs, will be debited from your bank account.

6. Get your Unique Identification Number (UIN):

  • To create a database of all Market Participants and investors, SEBI has made it compulsory for investors to get a UIN. You can get a UIN through Point of Service (POS) agents appointed by NSDL.
  • You must, however, note that a UIN is only required when you are trading in capital of Rs 1 lakh or more. If you want to purchase online shares below the amount of Rs 1 lakh, you don’t require UIN.

After following the five steps listed above, you are now all set to purchase shares online. Once you place a purchase order, it will be matched with a similar sale order in the stock exchange.

After settlement, your Demat Account will be credited with the number of shares purchased.

You can also refer our article on “How to make investment in Stock market without Broker?”

About Us

Under this blog that is on “How to Invest in Stock Market Online?” describes about the investment pattern that needs to be follow when there is need to make the investment in the stock market online.

I hope that you could relate with this blog and find it insightful and easy to grasp.

Trading Fuel gives informative material to the learners of the stock market. You can also scroll down to our website and you will get amazed by the contents that we provide as we only want to entertain the traders and investors. Read more from our blog site to stay updated with the situations.

Author Prashant Raut

Prashant Raut is a successful professional stock market trader. He is an expert in understanding and analyzing technical charts. With his 8 years of experience and expertise, he delivers webinars on stock market concepts. He also bags the ‘Golden Book of World Record’ for having the highest number of people attending his webinar on share trading.

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