Share market investments seem fascinating to many people. This investment avenue gives the platform to multiply money in a short span of time. Although the stock market seems enthralling to many people, there lies an enormous amount of understanding of the market. Once a person gets to know the ups and downs of online trading and how to tackle them, it can be used as a profitable pool of investment.
What Is Share Market?
Share market is a place where you can buy or sell shares. Any company which attempts to raise its capital; can do so by issuing shares. Anyone who buys shares of the company, becomes an investor in the company and a per cent shareholder to the extent of shareholding. With the growth of the company’s profits, the share prices also increase, thereby providing benefits to the investors, who can sell the shares to earn this profit.
Types of Mediators in Share Market
The Securities and Exchange Board of India has laid down certain rules and regulations for everyone who wishes to perform online trading. The following are the types of mediators, who help us in this process:-
- Stock brokers – provides stockbroking services
- Depository participants – Helps open Demat Account to hold the shares electronically
- Bank – Bank account is linked with the Demat & Trading Account to facilitate fund transfer between the trading account and bank account
- Clearing corporations – They help settle the orders placed by investors on the stock exchange
All these bodies ensure smoother and safer transactions in the share market.
What Is Required To Invest In Share Market?
To begin with, we need to understand the basic requirements of investing in share market. They are listed below:-
- PAN card- A PAN card is a mandatory requirement for investing in the share market.
- Demat account- Demat accounts or dematerialized accounts are very important, if you wish to start online trading. As the name suggests, Dematerialised accounts offer the facility of converting all your shares and securities in an electronic format. Opening a Demat account can be done offline as well as online. The following process explains how to open a Demat account online: –
- Select any depository participant(DP) and open their website. You can get a list of DPs on the website of CDSL and NSDL which are the 2 depositories in India.
- Fill up a form giving all the relevant details like personal details, bank details and trading preference (segments you want to trade in – equity, equity derivatives, etc.)
- Upload the KYC documents for proof of address and proof of Identity.
- E-sign the form by validating the OTP sent on Aadhar linked mobile number
- Review the form and final submit to complete the process
- You will get your login credentials after the account is activated on your email and phone.
- Trading account- To start trading, you need a trading account. A trading account serves as the platform for buying and selling shares. To begin with, open a trading account with any broker registered with BSE (Bombay S and the NSE. Also, you will be required to get a bank account linked with the trading account to allow money inflow.
List of the KYC Documents Required
- PAN card
- Address proof – Any one: Aadhar Card, Driving License, Passport, 6-month bank statement, Voter ID card
- Cancelled cheque or bank passbook – Required to link the bank account with the trading account
- Latest Salary slips (not less than 3 months old, needed if you wis to trade in Futures and Options).