This is an absolute beginners guide for investing in stocks.
In order to buy and sell stocks of a company, you require two things.
1) Demat Account:
In the earlier days we had to store physical copies of our share certificates with us.
Now stocks and other securities like debentures , bonds , government securities, units etc. can be stored electronically in a demat account.
In India we have two depositories, central depository service limited (CDSL) and national securities depository limited (NSDL).
An investor cannot directly open an account with them, but has to use the services of depository participants (DP), to open a demat account.
List of documents required for opening a demat account is given below.
- Proof of Identity: PAN card, driver’s license, passport, voter card etc.
- Proof of Address: Ration card, passport, driver’s license, voter card, landline telephone bill not more than 2 months old etc.
- Passport size photo
- Pan card copy
2) Trading Account:
A trading account can be opened with any broker. The important thing to remember is that to check whether the broker is registered with NSE or BSE.
For intraday trading and Buy Today Sell Tomorrow (BTST) the stocks aren’t delivered to your demat account.
The brokerage for intraday is generally between 0.01% to 0.05%.
The brokerage for delivery is generally between 0.1% to 0.5%.
You can bargain for the best rates with your broker based on your turnover.
Many brokers have a concept of minimum brokerage so check with your broker to find out what your minimum brokerage is.
Charges levied other than brokerage charges are Securities Transaction Tax (STT), Transaction Charges, SEBI Turnover Charges, Stamp Duty and Service Tax.
List of documents required for opening a trading account is given below.
- Proof of Identity: PAN card, driver’s license, passport, voter card etc.
- Proof of Address: Ration card, passport, driver’s license, voter card, landline telephone bill not more than 2 months old etc.
- Passport size photo
- Pan card copy
- Cancelled cheque
