How to buy shares online in India: A guide 

Gone are the days when buying stocks was a big deal, with brokers shouting prices on the trading floor and physical shares changing hands. The advent of digital platforms has made stock market trading a breeze, as everything happens with a few swipes on your smartphone. While you can easily access a trading platform by downloading an app or visiting a website, you must understand the process well before starting online trading.

If you are wondering how to purchase shares online, this step-by-step guide will help you in your stock market trading journey. Read on to learn more about the process, essential tips, and key factors to consider before making your first trade. 

The process of buying shares online

Buying shares online has become much simpler, with easy-to-access online trading platforms. However, understanding the steps involved in trading is essential for a smooth investment journey. Here’s a detailed guide on how to buy shares in India: 

Open a demat account 

To trade in the stock market, one must have a demat account – an account that holds shares electronically. Demat accounts are basically digital platforms through which you can buy or sell stocks. A demat account is important as it documents all transactions and makes it easy to manage investments without paperwork or physical documents.

Trading account

A trader must also have a trading account to buy and sell shares. Simply put, a trading account is a bridge between a demat account and a bank account. 

Link your bank account

Linking your bank account to your trading account is mandatory for smooth fund transfers. This ensures easy deposits and withdrawals while making transactions. If you don’t have a bank account, make sure to open one before proceeding with your stock market trading. 

Note: Before purchasing shares, transfer money to your trading account.

PAN card 

PAN or Permanent Account Number (PAN) is another must-have document to buy/sell shares online. It is a 10-digit alpha-numeric number issued by the Income Tax Department, Government of India. If you don’t have a PAN card, ensure to obtain one before proceeding. 

Choose a trading platform

Choose a SEBI-registered stockbroker to buy and sell shares. You can choose either a web-based or a mobile app-based trading platform. Do thorough research and pick a reputed platform like Lemonn that provides market data, analysis tools, and seamless order execution.

Unique Identification Number (UIN)

A Unique Identification Number (UIN) is mandated by the SEBI to track market participants. You can get a UIN from a POS agent set up by NSDL. However, it is only needed if you have more than ₹1 lakh in capital. 

Monitor your investments

Once all the necessary accounts are opened, you can start trading in the stock market.

After you purchase shares, track your portfolio using your broker’s platform. Analyzing your stock performance, staying updated with market trends, and making informed decisions is highly recommended.

Things to keep in mind before investing

Before investing in the stock market, it’s crucial to understand the risks and rewards involved. Let’s look at some key factors to consider before investing:

Understand your investment goals

The first step, perhaps the most important thing to do before investing in the stock market, is to understand your investment goals. Whether you are investing for the short- or long-term, your goals will determine the type of stocks or assets you choose.

Assess your risk tolerance

All market-related investments involve some amount of risk. Therefore, evaluating your risk appetite is essential. Whether you opt for high-risk stocks or safer options like blue-chip stocks and mutual funds, it is important to assess your risk tolerance. 

Diversify your portfolio

Avoid putting all your funds into one stock. Diversification across different sectors reduces risk and enhances returns.

Choosing the right broker

Do thorough research and choose a good broker with low brokerage fees, expert-curated stock options, and diverse investment choices. Brokers charge fees for trading, such as brokerage fees, transaction costs, and taxes. Compare costs before selecting a trading platform.

Research the company

Before investing in a stock, analyze its financial health, management, past performance, and future growth potential. Do not jump headlong into stock market investing driven by FOMO or peer pressure.

Keep market conditions in mind

It is essential to understand how financial markets behave and the rationale for stock movements. Stock prices fluctuate due to reasons ranging from market trends and economic conditions to global events.

Have a long-term perspective

Short-term market movements can be unpredictable. Successful investors focus on long-term growth and stability rather than reacting to daily price fluctuations.

Avoid emotional investing

Keep your emotions separate from your trading strategies. Investing should be driven by logic rather than emotions. Fear and greed can lead to impulsive decisions, so stick to your trading strategy, whatever the market situation.

What kind of stocks to choose for intraday trading?

For successful intraday trading, it’s crucial to consider some key factors like:

• High liquidity: Choose stocks with frequent trading activity to ensure smooth entry and exit.
• Price volatility: Opt for stocks that show significant price movement within a day, creating trading opportunities.
• High trading volume: Stocks with strong market participation reduce the risk of price manipulation.
• Sector trends: Focus on stocks within sectors showing momentum or breaking news, as they tend to be more active.
• Correlation with market indices: Stocks that move in sync with major indices help predict trends better.

What is ‘Value Area’ and why does it matter?

Value Area is the price range where 70% of a stock’s trading volume occurs within a specific time frame, usually a day. It helps traders identify key support and resistance levels for intraday trading. 

This strategy helps traders:

• Identify key price levels and spot areas where buying or selling pressure is strongest.
• Supports trading decisions and helps to determine entry and exit points.
• Identify market sentiment. If prices stay within the Value Area, the market is balanced; if they break out, it signals a trend.
• It helps in risk management and prevents traders from making trades in uncertain price zones.

Understanding the Value Area allows traders to make informed and strategic trading decisions based on market behavior.

Conclusion

Buying shares online in India is now easier than ever and can be done by anyone with a bank account, PAN, and funds to trade. However, successful investing requires careful planning and thorough research to make informed decisions. By following the right procedures, choosing a reliable broker, understanding market trends, and managing risks wisely, you can navigate the stock market confidently.