Stock Market for Beginners

A Beginner's Guide to Investing in the Stock Market

The stock market is where shares are issued and traded publicly. Stocks act as a negotiating document confirming your ownership of a business. The stock market is also where buyers and sellers exchange these documents. To facilitate public trading, a full-fledged marketplace has been developed for investors to buy and sell their shares.

Invest in the share market for beginners

To invest in publicly traded stocks, you must meet the following conditions:

1.Personal documents

• Pan card
• Aadhar Card
• Name on canceled check from your active bank account
• Proof of residency based on a list of documents accepted by your stockbroker, depository participant or bank
• Account statements
• Passport size photo

2. Demat Account

The Demat account acts as an electronic home for your actions. Opening a Demat account is an uncomplicated process, done either online or offline with the help of a depository participant. Many banks also provide investors with Demat account services.

3. A trading account

Demat accounts and trading accounts go hand in hand. A trading account is used to buy and sell securities that you want to trade in the stock market. Demat and trading accounts are required to invest in the stock market. Bombay Stock Exchange and National Stock Exchange are the main stock exchanges where stocks are listed. However, some stocks may only be available on either of these exchanges. Therefore, you should open your trading account with a custodial participant that offers trading on both the BSE and the NSE.

4. Linked bank account

Linking your bank account to your trading account ensures a smooth flow of money in and out of your account when trading. This is required by most of the brokers with whom you will choose to open a Demat account and trade. Currently, you can find a two-in-one account that is both a Demat account and a trading account. Some brokers also offer three-in-one accounts, where you can trade directly from your bank account and store your securities in one place.

Investment process

The investment process is different when one chooses to invest in the primary stock market versus the secondary stock market.

1. Invest in the primary stock market

Investments in the primary stock market are made through an initial public offering (IPO). Once all IPO applications are received and reviewed by the company, shares will be allocated to investors based on demand and availability. Simplified IPO application through your network bank account through an application backed by blockade (ASBA). As an example of this process, if you claim shares worth ₹1,000, the funds will be frozen in your bank account instead of being sent directly to the company. Once your shares have been allocated, the exact amount is then debited and the balance released. All IPO requests are subject to this procedure. Once the shares are allocated, they will be listed on the stock exchange and you can start trading them within a week.

2. Invest in the secondary stock market

The secondary stock market is where the buying and selling of shares takes place between investors. Follow these steps to invest in the secondary stock market:

• Open a Demat account and trade using your linked bank account.
• Log in to this trading account.
• Choose whether you want to buy or sell a stock.
• Make sure you have the necessary funds in your account to buy the stock.
• Next, decide the price at which you want to buy or sell a particular stock.
• Wait for the buyer or seller to respond to this request.
• Complete your stock trade by paying and receiving shares or transferring shares and receiving funds.

Last words

For beginners, the process of investing in stocks is quite simple. Knowing your investment horizon and financial goals is essential before you start investing in the stock market. Having advanced tools, expert recommendations and detailed real-time stock analysis data available to you as a beginner in the stock market is a huge factor in minimizing risk. To enjoy these benefits and more, open a Demat account and trade today.