Share markets are an area where shares are traded and traded. Shares are exchangeable document that proves the ownership of a business. The market for shares is the place where buyers and sellers trade documents. In order to facilitate exchanges openly, a formal market has been created for investors to purchase and sell shares.
To invest in stocks publicly listed on the market, you need to fulfil the following requirements:
1. Documents
- Aadhaar Card
- PAN Card
- Account statements
- Passport-size photographs
- Name a cancelled cheque from your active bank account
- Proof of residence based on a list of documents that have been accepted by your stock broker, depository participant, or bank
2. Demat Account
- A Demat account serves as an electronic house for your shares. Opening a Demat account is a hassle-free process conducted online or offline with the help of a depository participant. Many banks also offer Demat account services to their investors.
3. Trading Account
- A Demat account and trading account go hand in hand. A trading account is used to buy and sell securities that you wish to trade on the stock market. Both Demat and trading accounts are mandatory for investing in the share market.
- The Bombay Stock Exchange and the National Stock Exchange are primary exchanges where stocks are listed. However, some stocks may only be available on either one of these two exchanges. Hence, it is advisable to open your trading account with a depository participant who offers trading on both BSE and NSE.
4. Connect Bank Account
- Connecting a bank account to your trading account ensures a seamless flow of money in and out of your account as you trade. This is mandated by most brokers with whom you will choose to open a Demat and trading account.
- Currently, you can find two-in-one accounts that serve as both a Demat account and a trading account. Some brokers also offer a three-in-one account where one can trade directly from their bank account and store their securities in the same location.
The Investment Process
The investment process differs when choosing to invest in the primary share market as compared to the secondary share market.