Investing in the stock market is one of the best ways to achieve your financial goals. However, there are certain essential things that an investor should be aware of before entering the stock market. To start with, you need to first choose a stockbroker who acts as a bridge between you and the stock exchange. You should understand your goals and risk appetite before investing money. It is important to cherry pick the broker. If you need research guidance and support in terms of investing alongwith basictrading services, you can opt for a full service broker. If you just need a trading or investing platform, you can go for a discount broker.Discount brokers charge a little less than full service brokers as they offer limited services.Other major intermediaries in the stock market are stock exchange, depositories, registrars, custodian, etc.
The depositories in India are NSDL and CDSL. These hold securities (shares, bonds, mutual fund units, etc) of investors in electronic format through a registered depository participator a broker. A broker or depository participant is an agent of the depository through which the investor avails the depository services.
Role of depository:
1. Opening a demat account
2. Settlement of trades
3. Pledge dematerialised securities and facilitate loan against shares
Trading of securities take place in the stock exchange; NSE and BSE are the major stock exchanges in India. Investors may have long term or short term needs.Depending on your needs,you may decide to be either a trader or an investor. Trading allows you to make quick profit but it is also associated with higher risk.
As a trader, you should alwayskeep track of stock market updates. You should also know the various strategies that can help you in reducing loss. You should be very careful in choosing a particular stock and it has to be done only after a thorough research on the company. The company should be analysed on both fundamental and technical basis before investing your money into it.
Do’s and Don’ts while investing:
1. Deal only through SEBI registered intermediaries
2. Assess the risk-return profile of the investment as well as the liquidity and safety aspects before making your investment decision
3. Insist on a contract note for your transaction
4. Scrutinise both the transaction and the holding statements that you receive from your depository participant
1. Don’t invest based on hearsay and rumours; verify before investing
2. Don’t forget to take note of risks involved in the investment
3. Don’t hesitate to approach the proper authorities for redressal of your doubts/grievances
4. Don’t get emotionally attached to your investments
5. Review your investment choices periodically
All about Demat account
If you are planning to invest or trade in the stock market or looking to gather useful information on demat account in India, let’s know about it and the procedure on how to open a demat account.
Demat is an abbreviation of dematerialization, and it is an account where securities are kept in electronic form. For any investor willing to trade or invest in stock market, it is mandatory to hold a demat account. It acts same as a bank account where securities are held in electronic form. All you require is to open a demat account.
Steps to Open Demat Account
To open a demat account you must choose a depository participant from the website of depositories i.e. Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL).
Fill the account opening form with the following details:
• PAN card
• Aadhaar card
• Cancelled cheque
• Bank statement
You will be provided with a copy of rules and regulations, the terms of the agreement and the chargesincurred wherein you will have to sign and agree.
An in-person verification would be carried out.
After account processing, your depository participant will provide you with a demat account number and a client ID to access your account.
Features of demat account:
Convenient: Demataccounts give easy access to investors and traders to operate from any place.
Time saving: Another feature of Demataccounts is that it is time saving as trading and transfer of shares is quick, unlike earlier when it would take about a month’s time for the same process.
Easy tracking and monitoring: Demat account has made it easy for investors to monitor their investments and track the growth of the investments. Other than monitoring and tracking, investors can see the statements, etc.
Multiple accessing option: Demat account can be operated from anywhere using multiple accessing facilities like mobile, tablet, web, etc.
Corporate benefits and actions: In case the company offers corporate benefits, these are automatically made available in the demat account.