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.
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