How to Start Stock Market Investing in India? Know the Steps to Keep in Mind Before Investing

How to Start Stock Market Investing in India? Know the Steps to Keep in Mind Before Investing

Learn steps to start stock market investing in India: Unlike generations of the past, people today are looking to invest their savings across different options. One option that has attracted the most attention is the stock market. This is perhaps due to extensive media coverage of the returns delivered by the stock market in a short duration of time.

Today, due to the presence of electronic trading accounts, trading can be done anywhere and anytime. However, it is still fairly common for newbies to wonder how they can start stock market investing in India. What documents are required to be submitted before starting the investing process? Who are the concerned persons to approach? 

Well, you do not have to worry for long as we’ve got you covered. This article will walk you through the entire process of stock market investing in India.

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Steps to Keep in Mind Before Starting Investing in Stocks

Let’s understand what are the steps which everyone should keep in mind before starting stock market investing in India.

Get Associated with the Right Broker

In India, people trade stocks on two platforms: 

1) Bombay Stock Exchange (BSE), the oldest stock exchange in Asia, and 

2) National Stock Exchange (NSE), is categorized as the largest stock exchange in India. 

To gain access to these two exchanges, retail traders are required to register themselves with brokerage firms or DPS first. Please send an appropriate time to find out the right DP because retail investors will buy, hold, and sell stocks with the help of the interactive interface of the DP.

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There are some DPs in India who provide real-time market data to their registered users. As you must have heard, “In the equity market, information is money, and the profitable or a loss-making trade depends on the quality of research.”

Follow the Documentation Process

This is the second step to the question “How to start stock market investing?” To trade or make investments into stocks, you need to open a Demat account in which you can store your positions electronically and a trading account that can help execute the trades. Please make sure you are in the possession of the following documents: 

  • Permanent Address Proof
  • ID Proof (like Aadhaar card, Driving Licence)
  • Make sure of being e-KYC compliant.
  • Some other additional documents include the annual salary range, PAN card, etc. 

Understand the Difference Between Trading and Investing

Once the documentation process is over, the concerned authority will verify the documents. After the successful verification, your Demat account will be opened, and you will be given a User ID and password. The next step is to know the difference between trading and investing.

Trading, as the name explains, involves turning short-term fluctuations in prices into profits. The traders aim to take up large and significant volumes and sell whenever there are small price fluctuations. Watch the webinar on how to become a full-time trader to know more.

On the other hand, investing means holding the positions for a long period of time. The investors believe in buying the shares of the right company and holding them in the temporary ups and downs of the market.  

Get Well-versed with Investment Options

Before you start investing, ensure that you are well-versed with the investment options available. Choose an investment option suitable to your needs and your risk appetite. Investing in equities may be attractive, but it involves high risk. 

Focus on Investing for the Long-Term

If you want to enjoy the fruits of stock market investing, think like an owner of the orchard. In layman’s terms, buy the right stock and hold it for the long term. Investing, when done from the long-term perspective with proper research, will always bear fruit.

Follow the Principle of Diversification

The next step in stock market investing is diversifying your bouquet of investments. Maintenance of a diverse portfolio is the utmost requirement if one wants to succeed in stock market investing.

Diversification is required so that loss in one stock gets compensated by the profit in another one. There should be optimum diversification between large-cap, mid-cap, and small-cap companies.     

Regular Management of the Investment Portfolio

Whether you invest in stocks or any other investment vehicle, ensure that you regularly manage the investment portfolio. Stock markets are highly volatile and long-term investors need to make regular adjustments so that their portfolio can steer through whipsaws.

In Closing

After reading this article you now must have a fair idea of how to start stock market investing in India. Undoubtedly, the stock market is a lucrative means of investing which allows one to generate solid returns. However, the above-mentioned principles are a must to succeed in stock market investing. 

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