The process of buying and selling shares in the Indian stock market involves several steps. Here’s a general overview:
Open a Demat and Trading Account: The first step is to open a Demat (Dematerialized) account and a Trading account with a registered stockbroker. These accounts are necessary for holding and trading shares electronically.
Choose a Stockbroker: Select a reputable stockbroker that is registered with the Securities and Exchange Board of India (SEBI). You can opt for a full-service broker or a discount broker, depending on your requirements and preferences.
Complete the Account Opening Process: Fill out the account opening form provided by the stockbroker and submit the required documents, including identity proof, address proof, PAN card, bank account details, and photographs. The stockbroker will verify the documents and open your accounts.
Fund your Trading Account: Transfer funds to your trading account to have sufficient capital for buying shares. This can typically be done through online banking or a designated payment gateway provided by the stockbroker.
Place an Order: Once your trading account is funded, you can place an order to buy or sell shares. You need to specify the quantity of shares, the price at which you want to transact, and the type of order (market order or limit order). Market orders are executed immediately at the prevailing market price, while limit orders are executed only when the price reaches the specified limit.
Monitor and Track Your Investments: After placing an order, you can monitor the status of your trade through the trading platform provided by your stockbroker. You can track the performance of your investments, view market prices, and access other relevant information.
Settlement: In India, stock market trades follow a T+2 settlement cycle, which means that the shares you buy or sell will be credited or debited from your Demat account within two business days from the transaction date.
Dematerialization and Rematerialization: When you buy shares, they are credited to your Demat account in electronic form. If you decide to sell shares, they will be debited from your Demat account. The process of converting physical share certificates into electronic form is called dematerialization, and the reverse process is called rematerialization.
Paying Taxes: Any profits made from buying and selling shares are subject to capital gains tax. Short-term capital gains (holding period of less than one year) are taxed at a higher rate than long-term capital gains (holding period of more than one year). It is advisable to consult a tax advisor to understand the tax implications and fulfill your tax obligations.
It’s important to note that this is a general overview, and the specific procedures and requirements may vary based on the stockbroker and the regulations in force at the time of trading. It’s always recommended to carefully read and understand the terms and conditions provided by your stockbroker and seek professional advice if needed.