Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The BSE has been in existence since 1875. The NSE was founded in 1992and started trading in 1994. Both exchanges follow the same trading mechanism, trading hours, settlement process, etc. There are 7,000 + stocks listed on the BSEwhich is the larger of the two exchanges in terms of a number of companies listed. However, only 3,000 of these stocks are actively traded.
- 1 How to Start Stock Investing?
How to Start Stock Investing?
To start investing in the stock markets, you need 3 types of accounts – Trading Account (to place buy/sell orders), Demat Account (to hold your shares in dematerialized form), and a Bank Account (for fund transfers).
An account similar to a bank account, to be opened with a ‘stock exchange registered stock broker’. This account is used for placing orders in the stock exchange (i.e. to buy/sell shares).
An account where shares are held in a dematerialized form (i.e. electronically instead of the investor taking physical possession of certificates). The demat account is required to receive/transfer shares when you buy/sell shares through your trading account.
Your regular savings or current bank Account should be linked to your trading account. The Bank account is required to transfer/receive money when you buy/sell shares through your trading account.
To open a trading / demat account, follow the following process
- Approach a BSE and NSE registered stock broker.
- Fill up the KYC form provided by the stock broker.
- Attach the required documents – (i) identity proof and (ii) address proof.
- Produce the original PAN card during account opening.
- For Derivatives segment (i.e. futures and options market), 6 months account statement of your existing bank account is required.
- One canceled cheque of the bank account you want to link to your trading account.
- 2 passport size photographs
What you should look at before opening Demat and the trading account schemes
- Account Opening Charges: This is the fee charged at the time of opening a demat and trading account.
- Account Maintenance Charges: This is the annual fee charged to maintain demat & trading account.
- Brokerage Charges for the Intraday transaction: If you take a position (buy) on a stock and release (sell) that position before the end of that day’s trading session, it is described as intraday trading. The brokerage charges for the intraday transaction are very nominal (mostly between 0.02%-0.05 % on the total cost of the transaction).
- Brokerage Charges for transaction requiring delivery: If you buy a share and hold it beyond that trading session (i.e. for a term longer than one day) or when you sell a share you own and do not buy it back during a single trading session, the transaction qualifies as a delivery based transaction as the name of the owner of the share is changed with the Depository. The brokerage charges are higher in this case as additional processing is required (mostly they range between 0.08%-0.55% on total cost of the transaction).
- Brokerage Charges for Futures and Options transaction: The Brokerage fees applied on the transaction in the Futures and Options segment (mostly varies 0.02 – 0.05% on the total cost of transaction for futures and Rs 25 – Rs 100 per lot for option contracts).
- Apart from the brokerage charges, you may want to consider the software/ technology provided by the stock broker for online trading and if the stock broker has a good service standard for call and trade facility (to enable you to place orders over the phone).
These days, most big commercial banks provide trading and demat account services and link it to your savings account. Although their brokerage charges are slightly higher than specialized stock brokerage firms, unless you are a regular/ heavy volume trader, you should open your trading and demat account with your bank itself. For high volume traders, there are many specialized stock brokers to choose from.
The big advantage of having an account with a Bank (like HDFC, ICICI etc) is that they typically provide a three-in-one-account (i.e. savings account, trading account and demat account are all linked to each other).
For heavy volume traders, it is advisable to open your account with a specialized brokerage house. Not only do they have an extremely low brokerage rate but also offer fixed monthly brokerage schemes for heavy traders.
Recommended Broker – Zerodha
Zerodha was one of the first brokerages in the country to start discount broking in the country. The company is now scaling high with its new technology.
Zerodha is amongst the fastest growing, top volume contributors with an average daily trading turnover of over Rs 10,000 crores. The company now offers traders and investors in equities to open demat account instantaneously with their Aadhaar.
- The brokerage firm charges a flat fee of Rs 20 per transaction.
- Intraday and equity futures attract a fee of 0.01% or Rs. 20/ trading transaction whichever is lower Equity delivery transactions are offered free.
- Trading account opening charges(one time) are Rs 300. Demat Account Annual Maintenance Charges (AMC) are Rs 300 per year.
My views on Zerodha Broker
I personally use Zerodha trading and demat account because of the there highly discounted brokerage, quality of service, customer support and different trading platforms like Zerodha Kite(web based), Zerodha Pi (Windows Application) and Zerodha Android App etc.
Visit the website and fill your details then sign up or click on call me back. They will call you and instruct for further procedure.