Stock Market Investment implies different implications for different users. It implies a different meaning for an intraday trader than what it is for a long-term investor.
At the same time, it may come up with different return values for traders with different risk appetites.
Furthermore, a beginner level trader has a different expectation from it as compared to a seasoned investor and so on.
What does this mean to you?
Let’s try to figure out what Stock Market Investment means to you, what are the steps you need to take care of to get started, what risks to avoid, what mistakes to stay away from and more!
Stock Market Investment For Beginners
Before we start discussing how to start investing or trading or your first steps towards Stock Market Investment, let’s put out a statement – Stock Market Investment is like building a relationship. You’d have to be keen and deeply interested in it, know as much as you can about it and keep your head high throughout!
You will be excited right at the start, but all it needs is persistence, understanding and patience. This is pretty much any relationship might need as well! Right?
Now, since we have built this establishment, we can dig deep on the First Steps to Stock Market Investment and understand what are the potential aspects that you must take care of throughout your existence in the stock market.
Not to worry, these are the stocks of the start-up companies that are not listed with BSE or NSE.
These companies are in their initial growth so it is advisable to invest in such stocks only when you are sure about their future growth and profits. Now, if you have made your mind know How to Buy Unlisted Stocks?
Steps To Invest in Stock Market India
Now, let’s discuss the crux of the whole matter. It all comes down to execution and what steps are needed for you to invest in the Indian stock market.
What follows is a detailed guide on 7 steps that you need to take one by one:
1. Get a PAN Card
The first and the foremost step of your journey towards the world of stock market investment is the necessity of a PAN Card. And getting a PAN card in India has never been easier before. All you have to do is:
Go to the NSDL website and register yourself by providing your details.
Arrange the requisite copies of the documentation including:
Date of Birth Proof
2 recent photographs
Dispatch these documents to the Income-tax PAN services office
Once your application gets processed, your PAN card is delivered to your residential address
So, that’s it! Once you get a PAN Card, you are eligible to apply for a Demat account, but before that, you need to choose a stockbroker.
Once you are sure to go ahead with a particular broker, the next thing you need to do is open a Demat account and get started with your Stock Market Investment.
If you find narrowing down a particular stockbroker, you can provide your details HERE. We will arrange a free call back to help you with that.
3. Apply for a Demat Account
Once you have finalized a particular stockbroker of your choice, Bravo!
Pat yourself on the back because it is one of the trickiest aspects of the whole journey.
Now you just need to provide your contact details and pretty much any prominent stockbroker will come back with a callback. You would need the following documents to open a Demat account with any SEBI registered stockbroker in India:
PAN Card (the document from Step 1) with a valid photograph
Proof of Address
One recent photograph
For NRIs, these additional documents are required:
Copy of RBI Approval through a PIS Permission Letter for the account opened with a designated bank.
Before you put any capital out there on the market, it definitely makes sense to understand where you are going to put your money. There are so many resources you can rely on to start with. Some of those are listed below:
Books on Trading and Investing – Few examples include
You need to understand that this step must be taken super seriously.
Unless your basics of Stock Market Investment are not correct, there is no point going forward from here. Make it a habit and get a hang of spending a few hours a day regularly if you want to get anywhere as far as trading is concerned.
It will take some time, but trust us – this will help you to have strong foundations going forward.
5. Follow the Market Every day
Yes, once you understand the basics (as mentioned in Step 4), it will become relatively very easy for you to gulp and understand the market dynamics. For a start what you can do it, narrow down a list of let’s say, 20-30 prominent stocks and start understanding their behaviour.
You need to see how these stocks have moved in the past along with the present-day movements.
There are so many ways you can track the market including:
TV (just to see how it works, not recommended while taking trading decisions)
Newspapers (only to read what experts have to say on specific subjects)
Paid online subscriptions
Once you start understanding the market nuances and even the basic level of hows and whys of market movements, you can move ahead into the practicals! It’s time, you test yourself into the world of trading with whatever you have gained by now.
6. Create your FIRST Strategy
Since by now, you know that you are here for trading (high risk, high returns) and/or investing (low-risk, time taking income-producing stocks) – your strategy of stock picking and other related aspects will go with that thought in mind.
With your first strategy, there is a possibility that you will be nervous, under-confident, and so on.
However, as long as you believe in the ideas and study behind the strategy you have jogged down, stay invested in it. What is the worse that can happen?
If nothing goes your way, well you will definitely learn a lot. That is why it is better to know the Sectors in Stock Market in India where you can invest and take decisions accordingly.
And at the same time, If all things go fine, you will end up making some money. So either way, there is something to gain for you. One thing to remember is – never let your emotions take over while taking a decision in Stock Market Investment.
Try to be as objective as you can.
7. Keep Tracking & Learning
So once your capital reaches the market, then obviously need to track market movements as per your portfolio along with other potential opportunities.
Be wary of any news related to the stocks you have invested in, any industry-related changes, any corporate or management-related changes, new entrants into the market, potential foreign threats or opportunities and a lot more.
Once you are there and reach an intermediate level understanding (if not advanced), you will actually go beyond all this and even start predicting on your stock performance based on the technical analysis you come up with.
At the same time, do not get over-worried in case of certain movements that may or may not impact anything. Once again, remember not to let your emotions take the front seat.
Now, as you are getting into the stock market space, it makes total sense for you to start with the education app and learn stock market online.
Stock Market Investment can be made much simpler if you have a strong base to start with.
From there, you can move to use stock market analysis apps and then place an order using different mobile trading apps.
Once you are confident enough, you can move to much-advanced apps such as the ones used for algo-trading or trade signals. But it makes total sense to get started with one or more of these mobile apps in your stock market investment journey.
Before you start doing anything that may lead to providing you monetary returns, doesn’t it make sense to learn about the basics and tricks of the trade before you show up in the market?
Well, the same concept goes with stock market investment space as well.
There are multiple ways to register to different stock market investment courses, be it offline or online. While offline courses have their benefits and limitations, online courses bring in a lot of variety as well as convenience to different users.
As mentioned above, Stock Pathshala is one of the reliable sources and can be seen as a dependable stock market investment course.
This is one of the most looked up topics where a lot of beginner investors are looking for easy money or short-cuts.
Let us know one thing!
There are no shortcuts to getting consistent returns from the stock market. You will have to equip yourself with strong fundamentals of how to analyze stocks and make corresponding investment decisions.
Yes, you may be lucky once or twice in figuring out the “right” stock at the “right” time with a “right” decision to buy or sell.
But, you can’t ride on luck every time you make an investment in the stock market.
And yes, you can subscribe to any stock market advisory anytime as well. But are those advisory firms really trustworthy? And can you really afford to pay them hefty money every time you are looking to make a stock market investment decision?
Yes, there are a few generic tips about things to take care of in your stock market investments, but those are not “tips” to place a “specific” order.
Some of those tips include:
Understand the brokerage and other charges for Demat account levied on your trades from your stockbroker. Otherwise, you may feel cheated once these charges are placed. For more information, you can check this brokerage calculator for reference.
Use margin trading cautiously. Although SEBI comes up with different policies on margin trading every now and then as a responsible trader, it is your responsibility that you use margin as per your risk appetite only.
Use stop-loss and target price religiously. This will help you to keep your losses limited and at the same time, assist you in getting rid of any unnecessary profit greed, you may have.
Whenever there is an opportunity, book the profit and exit!
A lot of people will tell you to not get emotional about your trades. Well, they are right!
Once you yourself get into the groove of stock market investment space, you will find these tips handy and in fact, may come up with your own tips as well. Feel free to share those in the comments section!
Stock Market Investment Strategies
When we use heavy terms such as “Strategies”, well it can have different meanings for different people.
The strategy for a beginner level investor will certainly be different from the strategy for an intermediate or an advanced level investor.
Here, we will discuss some of the stock market investment strategies for a beginner investor:
Make investing a habit and invest some portion of your income regularly rather than investing lumps every now and then.
By the time, build a portfolio of your investments and not just focus on one type of investment product. Feel free to learn more about portfolio management services.
Look for value stocks if you can. These stocks will be undervalued as of now but with time, have the highest tendencies to bring decent returns.
Again, as mentioned above when we discussed the different stock market courses and pointed out the importance of learning about stock market investments, we are trying to reiterate the same point here.
The reason for that is that you simply cannot discount the kind of importance that learning the art of investing brings to the table.
Some of the aspects that you MUST learn around are:
Make sure you know the reasons and the objectives of your investment decisions
Learn about different forms, instruments and financial products that can be invested in
Remember to learn what exactly is your risk appetite. This will help you in selecting the investment form you may feel comfortable in.
Well, there is no minimum amount as such to initiate your stock market investment journey. You can start with any amount, really.
Although, your stockbroker may put up a limitation on the minimum capital to start with and this amount may vary from one broker to another.
But, as per our recommendation, it makes sense to start with at least INR 5,000 to see the objective performance of your stock market investment.
What all charges are levied on my stock market investments?
When you place orders for your investments, there are multiple types of charges levied.
First of all, you’d need to pay the account opening and maintenance charges to your stockbroker. Then, it will also levy brokerage on the trades you place. Sometimes, they also offer monthly or yearly brokerage plans where you can trade in one or more segments without any limit.
Then, there are other forms of charges levied by different regulatory and government bodies such as:
You will get all the details of your trades in a document called “contract note” by your stockbroker. Make sure to keep an eye on that and see whether you are being charged correctly or not.
How do I choose stocks for investments?
It depends on the form of trading you are into.
As mentioned above, long-term investments would require you to perform the fundamental analysis while short-term trading will require you to go through the technical analysis of stocks first.
Make sure you go through different charts and other analysis tools before figuring out the specific stock(s) you are going to invest your capital into.
Investing without analyzing is like shooting an arrow in the dark.
In order to buy or even sell stocks from the stock market, you can use any of the below mentioned modes:
Mobile trading app
Web trading platform
Call and Trade
The first 3 methods are online in nature and can be accessed through a smartphone, laptop or desktop system only.
However, the fourth method requires you to call your local sub-broker and request him/her to place the order on your behalf. Most of the stockbrokers place a separate fee for this type of trading methodology.
Can my stockbroker close? What do I do then?
Yes, it can. Every year, a few stockbrokers default due to various reasons. Otherwise, a few are suspended due to some non-regulated practices.
In such cases, the trader clients have a holdback from SEBI where they are provided with insurance of up to INR 25 Lakh by the regulator. Their shares are anyway safe with the requisite depository i.e. CDSL or NSDL.
In simpler words, don’t worry about it!
What time I can buy or sell stocks from the stock market?
The stock market equity segment is open between 9.20 am to 3.20 am. There are pre and post-trading sessions of 10 mins each as well, which is beyond these timings.
Furthermore, different indices are closed on weekends and on national holidays.
The currency exchange, however, is open 24 hours a day, 5 days a week.