Investing in shares has become a very easy procedure after it has gone online. It is possible to invest in shares online for both the primary market and the secondary market i.e for Initial Public Offers as well as for companies whose shares have already been listed.
The first step to invest in shares online India is to open a demat and trading account with a reputed broker like Kotak Securities who can provide all the needed support. A demat account is an electronic repository for all the financial instruments that a person invests in such as shares, mutual funds, bonds, derivatives etc. A trading account enables you to purchase and sell shares.
How to invest in shares online:
The procedure to invest in shares online is as follows:
- Open a demat account with a reputed broker
- Open a trading account. It is not necessary to open the demat and trading accounts with the same broker
- Transfer funds from your bank account to your trading account
- Pick the share to invest in
- In the trading account, input the quantity of the shares and the price at which you want to buy it depending on the price of the share in the market
- If you don’t want to manually put in these details, you can ask your broker to purchase shares at a particular price. Once you give the instruction, the broker will put in the order through his system and that will get passed on to the stock exchange for order matching and fulfillment.
- Remember to transfer funds more than the exact amount of share price since you will need to pay brokerage on the transaction to the broker, and pay Securities Transaction Tax (STT) to the stock exchange.
The above procedure is only for investing shares in the secondary market i.e for shares that have already been listed in the stock exchange. For primary market or for initial public offer, you can invest both online and offline. For both online and offline applications, the procedure that most issues follow is ASBA (Application Supported by Blocked Amount) which means you need to pay the exact amount only after shares have been allotted to you. In IPOs the number of shares applied to is not necessarily the number of shares that are allotted. It is possible to apply for IPOs through your trading account and once shares are allotted, you will have to pay money for them.
Investing in shares online is a very simple process. You can find a lot of online guides if you want to learn about this procedure on websites such as Kotak Securities. There are lot of advantages to investing in shares online. By learning how to do this, you can participate in the stock market and grow your capital.