How to Buy Shares With a Demat Account?

Investment in the stock market can be a confusing thing to do. However, if you have all the knowledge and the right kind of tools, it becomes an easy and reward-worthy investment. While there are many tools to help traders get potential returns and good experience, one of the major tools is a demat account. Demat, short for dematerialised, is considered a digital account that holds all your securities and bonds. In this blog, we will discuss the steps that one needs to follow to buy shares with a demat account.

Steps to follow to buy Shares with a Demat Account

Buying shares with a Demat account can be done in a few steps. Let’s look at the steps to be followed to buy shares with a Demat account:

• Obtain a PAN Card: The first and major step to start your shares buying with a Demat account is to have a Permanent Account Number (PAN) card. It is important to have a PAN as it is a necessary requirement for opening a Demat and trading account. Applying for the PAN card can be done in two ways, either you can apply through the online website of the Income Tax Department, or you can get help from centres that apply for PAN.

• Open a Demat Account: Select a Depository Participant (DP) registered with either the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL). Then open your Demat account for trading. Work as a digital space, a Demat account will have all your shares bonds, and other securities in an electronic form.  There are several options for opening your demat account like going with banks, financial institutions, or brokerage firms.

• Open a Trading Account: Simultaneously, with a new demat account you also need to have a Trading Account with a brokerage firm. A Trading Account is very important for executing buy and sell orders, especially in the stock market. Choose a brokerage firm that offers user-friendly trading platforms, and has competitive brokerage rates, that too with reliable customer support.

• Select a Broker/Brokerage Platform: You can select a reputable broker certified by the Securities and Exchange Board of India (SEBI). SEBI regulates the securities market in India,  and you need to choose a broker authorised by SEBI. Research different brokers, and compare their brokerage charges, trading platforms, research tools, and customer support.

• Link a Bank Account: Connect your trading account with a bank account for seamless fund transfers. This step is crucial for buying shares online. Most brokerage firms allow you to link multiple bank accounts to your trading account, providing flexibility in managing your funds. Ensure that the bank account linked to your trading account is active and has sufficient funds to execute trades.

• Place Buy Order: Log in to your trading account using the credentials provided by your brokerage firm. Navigate to the trading platform and select the stock you wish to purchase. Enter the number of shares you want to buy and specify the price at which you are willing to buy them. You can place different types of orders, such as market orders, limit orders, or stop-loss orders, depending on your trading strategy and risk tolerance.

• Execution and Settlement: Once you place a buy order, the stock exchange matches it with a corresponding sell order. After the buy order is successfully matched, execution of the transaction happens leading to you becoming the owner of the purchased asset or shares.  Settlement of the transaction occurs within two working days, in which the purchased shares get transferred to your demat account. It’s essential to monitor your trade confirmation and settlement statements for accuracy and timely process.

Step-by-Step Guide: How to Open a Demat Account Online in India

Follow these steps, to easily open a Demat account online and start your investment in India.

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• Research and Choose a Stockbroker:  Start your process by researching the best stockbroker and go with the reputed one for demat account opening.  The broker should be registered with the Securities and Exchange Board of India (SEBI) for legitimacy and have good reviews.

• Visit the Stockbroker’s Official Website: After being done with the basic research and considering the criteria of SEBI, visit the official website of the chosen stockbroker. Select “Open Demat Account” and start with the process.  Give the basic details such as your full name, mobile number, email address, and any other required information as prompted.

• Verify Mobile Number and Email Address: After entering all your details, you might be asked to verify your mobile number and email address. For verification, you will get a one-time password (OTP) sent to your registered mobile number and email.

• Upload KYC Documents: Next, you need to upload scanned copies of all your essential KYC documents as per the stockbroker’s requirements. Some basic KYC documents are a PAN card, an Aadhaar card, a cancelled cheque for bank account verification, and any specified document by the broker.

• Upload Photograph and E-Signature: Next, you need to upload any recent passport-size photograph and your electronic signature.

• Undergo Verification Process: Depending on the stockbroker’s policies, there will be an in-person verification process. 

• Receive Demat Account Credentials: After successful verification, you will receive your Demat account credentials via email or SMS. With these credentials, you can start your trading process and begin your investment with a demat account.

Conclusion

Investing through a Demat account simplifies share buying, offering convenience and efficiency. By following the outlined steps, investors can confidently navigate the stock market. Researching, selecting a reputable broker, and adhering to regulatory requirements are crucial. Opening a Demat account, linking it to a trading account, and understanding order placement are key steps. 

Regular portfolio monitoring and diversification enhance investment success. With knowledge and tools, stock market investing becomes a rewarding journey toward long-term wealth creation. Start today and help yourself to achieve financial goals through disciplined investing with your new demat account.