Are you interested in learning how to trade shares in India but don’t know where to start? Look no further! In this comprehensive guide, we’ll walk you through the steps of getting started in share trading in India.
What are shares and how do they work in India?
Shares, also known as stocks or equities, are units of ownership in a company. When you buy shares in a company listed on the Indian stock exchanges, you become a shareholder and are entitled to a portion of the company’s profits and assets. Companies issue shares to raise money for business expansion or other purposes.
In India, shares are traded on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
There are two main types of shares: common shares and preferred shares. Common shareholders have voting rights and a claim on the company’s assets and profits after all debts and obligations have been paid. Preferred shareholders have priority over common shareholders when it comes to receiving dividends and liquidation of assets, but they do not have voting rights.
According to data from the Securities and Exchange Board of India (SEBI), as of December 2020, there were over 5,700 listed companies on the NSE and BSE with a combined market capitalization of over INR 188 trillion (approx. $2.5 trillion).
How to start trading shares in India
- Open a brokerage account. In order to buy and sell shares in India, you’ll need to open a brokerage account with a registered member of the NSE or BSE. There are various types of brokerage accounts to choose from, such as traditional full-service brokerages or discount online brokerages. Do your research and compare the fees, services, and tools offered by different brokerages to find the one that best fits your needs. You’ll also need to complete the necessary paperwork and provide identification and other documents as required.
- Choose a trading platform. Most brokerages in India offer their own online trading platform, but you can also use a standalone platform or a mobile app. Consider the features and user experience of the platform, as well as the fees for placing trades.
- Fund your account. Once you’ve opened a brokerage account and chosen a trading platform, you’ll need to fund your account in order to start trading. This can typically be done by transferring money from a bank account or by using a credit or debit card.
- Do your research. Before you start trading shares in India, it’s important to do your due diligence and research the companies whose shares you’re considering. Look at their financial statements, news articles, and other publicly available information to get a sense of their performance and prospects. You can also use tools like stock screener to filter and compare different shares based on various criteria.
- Develop a trading strategy. Trading shares without a clear plan can be risky. Consider your investment goals, risk tolerance, and the amount of time and money you have to invest. A common strategy is to diversify your portfolio by investing in a mix of shares from different industries and market caps. You can also use stop-loss orders to minimize potential losses.
Tips for
- Start with a small amount of capital and gradually increase your investments as you gain experience and confidence.
- Don’t put all your eggs in one basket. Diversifying your portfolio can help reduce risk. According to a study by J.P. Morgan Asset Management, a diversified portfolio of stocks has historically had a lower volatility compared to a single stock.
- Stay up to date with market news and analysis. Follow financial news and subscribe to newsletters or research reports from reputable sources such as The Economic Times or Moneycontrol.
- Keep emotions in check. Trading shares can be exciting, but it’s important to avoid letting your emotions cloud your judgment. A study by Dalbar found that the average investor’s returns lag behind the overall market’s returns due in part to poor timing and emotional decision-making.
- Be patient. Don’t try to make quick profits by constantly buying and selling shares. Instead, take a long-term approach and hold onto your shares for at least a few months or even years.
Suggested sites or brokers for share trading in India
- Zerodha
- Upstox
- 5Paisa
- Angel Broking
- ICICI Direct
Note: These are just a few examples and are not endorsements or recommendations. Be sure to do your own research and compare the fees, services, and reputation of different brokers before making a decision.
I hope this guide has been helpful in getting you started on your journey in share trading in India. Good luck and happy investing!
