Securities and Exchange Board of India is the body that regulates and governs the registration of companies on the exchange. A share market can be of two types:
Primary share market: a company enters this market with the primary aim to raise funds through Initial Public Offerings. When companies choose to get registered on the stock exchange, they do so on the primary market and go public.
Secondary share market: this is where the traders buy and sell the stocks of companies which are already listed on the exchange. Here the shares are bought by one investor and sold by another at the prevailing price.
The share market functions on two major stock exchanges like NSE and BSE where financial instruments like stocks and derivatives are traded. The movements in the share market take place with the following market participants:
Companies who register themselves on the exchange as public companies. These companies issue shares which are traded on the platforms. SEBI tracks these records and eligibility of companies to become public.
Stockbrokers and brokerage firms who make these stocks and shares available to the investors and traders. They are the intermediaries between the investors and the stock exchange.
Traders who sell and buy stocks in short intervals and keep the market movements going.
Investors who place their money for a longer period and wait for the companies to grow.
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In order to buy shares online, you must fulfill the following criteria:
PAN Card: a Permanent Account Number is an important proof for financial transactions issued by the tax authorities of India. If you want to buy shares online, this is the first document you will need to open anything from a bank account to filing IT returns.
Broker: Once you have the documentation in place, you will need to find a broker who is registered with the SEBI and can guide you through the process of buying and selling stocks.
Demat & Trading Account: in order to carry out the sale and purchase of any stock, you will need an account that can store all the dematerialization certificates and carry out your transactions.
Once you’ve opened your accounts and linked it to a savings account, you transfer the money your Demat account and decide which shares you want to buy and at what price.
When you have all these factors in place, you can have access to your demat account online and carry out the sale and purchase of stocks. When opening a demat account go for a 3-in-1 account that also adds a savings account to the mix. This will help you transfer your money easily.
Buying shares online has become a popular and accessible way for individuals to invest in the stock market and potentially grow their wealth. However, there are certain criteria that one must fulfil to engage in this activity. In the below explanation, we have outlined the essential requirements and steps involved in buying shares online.
Age and Legal Capacity
To buy shares online, an individual must be of legal age and have the legal capacity to enter into financial transactions. In most jurisdictions, the minimum age for opening a brokerage account and purchasing shares is 18 years old. Minors are not permitted to engage in these activities without the involvement of a legal guardian or trustee.
Bank Account & Identity Verification
To buy shares online, you must first link your bank account to your brokerage account. During the account opening process, you'll need to undergo identity verification by submitting essential documents like PAN card, Aadhaar card, and address proof. This verification is required to comply with regulatory norms, prevent fraud and ensure a secure and transparent trading experience. Once your account is verified, you can fund it through the linked bank account and start buying shares through the brokerage platform.
Choosing a Brokerage Platform
There are various online brokerage platforms available, each offering different features, trading tools, and fees. Investors should research and select a brokerage that aligns with their investment goals, risk tolerance, and trading preferences. Factors to consider include trading fees, account minimums, customer service, and available investment options.
Bank Account and Identity Verification
Opening an online brokerage account requires linking it to a bank account. The investor needs to provide accurate personal information, including their full name, date of birth, address etc. The brokerage will use this information to verify the investor's identity
PAN Card (Permanent Account Number)
The PAN card is a mandatory document for all individuals who wish to invest in the Indian stock market. It serves as a unique identifier for taxation purposes and is required for opening a demat account and conducting financial transactions.
Beginners can buy shares online by opening an account with a trusted online brokerage, completing the required identification and bank account verification, and then placing buy orders to purchase shares through the brokerage platform.
For beginners, buying shares online involves opening an account with an online brokerage platform and purchasing shares by placing buy orders through the platform's interface.
Large Cap Stocks are shares of well-established and financially stable companies with a large market capitalization. These stocks can be attractive for beginners seeking a source of passive income.
To start buying shares online, open an account with a reputable online brokerage, fund the account, and begin purchasing shares by placing buy orders through their platform.
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