This article will guide you through the process of investing in shares in India. As a beginner, you need to do the flowing:
Get a PAN card:
PAN or permanent account number is the main need for entering any financial transactions in India. It is unique 10 digit alpha-numeric number which is assigned to everyone by tax authorities for assessing their tax liabilities.
The pan number is needed to open a bank account, investing in mutual funds, filing income tax returns and this is the first most thing you need have for investment in shares in India.
Get a broker:
Any normal person cannot directly go the stock exchange and buy or sell stocks . There are some people authorized on the markets and they are called as brokers.
The brokers can be an individual person or companies or online agencies which are registered and licensed by Sebi or other securities exchanges board of India who regulates the share markets. Before you invest in shares try to get a broker, they can be individuals as you know and they are reliable or you can approach different companies which are licensed to trade and deal in securities in the markets.
Get a demand and trading account:
The demand account will hold the stocks or share in your name and the same will reflect in your stock portfolio. You cannot able to hold the shares in physical form or store them physically. They have to dematerialize the state or demand state.
It will store the shares you buy from the markets via your brokers in your account with your own name. The selling process will also be from here and it will reflect in your demat statements which you receive from time to time.
The buying and selling of hares you wish to have to you wanted to sell will, however, need a trading account. The trading account will be same as an intermediary who facilitates the buying and selling.
Get a UNI number:
The unique identification number is needed in case you trade for 100,000 or more than that at a single time.
Know you depository participant:
Before you start investing in the shares, there is also a depositary participant that you need to be aware of. There are two depositories in India as NSDL and CDSL which stands for the national securities depository limited and central depository service limited.
These two have their agents in the form of depository participants who will provide an account to store the shares you hold. It is not same as the demat and trading account as in demat it shows the number of shares you hold and the trading reflects the buying and selling which has taken place in your account.