How to Start Investing in Share Market in India?

Financial security and independence have become more important than ever and investment in the share/stock market can be a good way to achieve financial goals. When you invest, you don’t work for money rather your money work and make more money for you. Investment can fight for you against inflation.

I believe that you already have decided to invest in the share market. Before you actually start this adventurous journey as an investor,  you need to understand some basic concepts related to the stock market.

start investing in indian stock market

Here are some steps that need to be taken before you can buy Shares for the first time –

  • Get educated
  • Determine your financial goals and risks tolerance
  • Choose a broker
  • Get a Demat and Trading account
  • Do some research work to Identify potential Stock/Shares
  • Invest

Before we get started Let me answer the question that beginners ask often – What is the Minimum Amount I can start investing in the share market? Or minimum amount to enter the stock market?  

There is no specific minimum amount required to enter the stock market. Although,  to start investing you need a Demat and Trading account which can cost you a little typically between 350  to 750 Rupees. In my opinion, 5000 Rupees is a good amount to enter and experiment with. Even if you lose money, you will end up learning some hard lessons that will make you a better investor.

1. Get Educated

As a beginner, you should learn some basic terminology used in the share market to get an insight that will help you in making better and technically sound decisions about investment. You need to learn how the stock market works, why stock prices go up and down, and much more. Here are some terms that might help you to get started-

  • Stock exchange/share market –  an organization that provides a platform for brokers and traders, to trade a company’s share or other securities. Ex.- NSE(National Stock exchange) and BSE(Bombay stock exchange)
  • Outstanding shares – Total no. of shares of a company held by all of its investors.
  • Dividends – When the growth of a company stabilizes, the company can choose to pay investors back in form of dividends.
  • Earning per share – Amount that a company earns per share of stock. for example – if a company makes 100 rupees and there are 10 shares outstanding, then one share will be 10 rupees.
  • Market capitalization – It is used to get an insight into the size of a company. It is calculated by multiplying the current share price and all the outstanding shares.

Read other important aspects and terms of the share market on the internet or other reliable sources.

2. Determine your financial goals and risks tolerance

You must know what are you investing for. Do you want to buy a car or a home or save for retirement? How much do you have to invest and how much time do you have to achieve your goals? Determining your financial goals will help you to make a better investment plan and later you will choose the stocks accordingly. Be specific as much as possible while making the list of your financial goals.

Always remember that different risks are attached to investments. You must determine your risk tolerance level and know about what is at stake here. Now you can choose the type of stocks you want to invest in according to the return you want. Choose volatile stocks (high-risk stocks) for quick and high returns or opt for blue chips stocks (low-risk stocks) for long-term investment.

3. Choose a Broker

You can’t buy or sell shares/stocks yourself by directly going to the stock exchange. You must go to someone who is authorized to do this and that someone is called a Broker. As per SEBI(Security and Exchange Board of India) rules, only registered brokers and sub-brokers are authorized to buy/sell stocks/shares and other securities.  There are more than 8000 brokers and sub-brokers out there registered with SEBI and that makes it difficult to choose the right broker for you. Here are some names of brokers in India –

Zerodha, Paytm Money, ICICI Securities, HDFC Securities, Sharekhan, Indiabulls, Motilal Oswal Securities, and   Kotak Securities (these are just names and not my recommendations, choose a broker only after proper research work ).

You can consider several factors while choosing a broker such as –

  • Type of a broker – Online/offline Broker | Discount broker | full-service broker
  • Reputation and Quality of service
  • Brokerage/ Brokering rates –  Different brokers charge different brokering rates typically between 0.50% to 1.5 % when you make a transaction. Choose one wisely because it can save you a lot of your hard-earned money. According to SEBI guidelines, a broker can charge a maximum of 2.5%  as brokerage.
  • Flexibility and Convenience 

4. Get a Demat and Trading account

Your financial assets (securities or shares) are kept in electronic form and the place where the securities are kept is called the Demat account. Demat accounts are opened with DP (Depository Participant). DP works as an intermediary between you and the depository. There are two depositories in India – NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) and more than 250 DPs are registered with them.

Actually, you just need to visit the broker you selected in the previous step. Often brokers also act as DP and they provide both Demat and Trading accounts for you. A trading account is necessary for buying and selling shares.

Get these documents and Visit the Brokerage House for Demat and Trading account –

  • Proof of residence (Electricity bill/Driving license/ration card etc)
  • Proof of identity (PAN card is a must)
  • Bank account details (account statement/canceled check)

The broker will provide a form for opening a Demat and Trading account. Fill it out carefully and sign it where ever required. Within a few days after applying, You will get your trading and membership passwords and other details by post and you will be able to log in and buy and sell shares through the website or mobile app of your brokerage firm.

Some Brokers and Banks are also offering 3 in one account (Bank account, Demat account, and Trading account). You can open all the 3 accounts with the same entity.

Note: You don’t need to visit a broker’s office now. Everything is done online.

5. Do proper research work to identify potential stock/shares

Although after opening Demat and Trading account, you can buy/sell shares it is advised to do proper research before making such a decision. The share market keeps fluctuating and a slight mistake will end up losing your money. Proper research is required to identify the stocks which can meet your financial needs.  Seek advice from someone who understands the market better than you, maybe your broker or a financial adviser. No wise investor invests without research.  People who invest blindly often end up blaming the share market and their fortune.

6. Invest

Once you have identified the stocks that can meet your financial goal, you can buy shares through a website or mobile app or in some cases just by calling a broker. Suppose you have picked up Idea Cellular to invest in 1500 Rupees. Then this is how it goes –

Suppose the current price of one share of Idea Cellular is  -150 Rupees

To spend 1500 Rupees, you have to buy 10 shares of Idea Cellular (150 * 10 =1500) .

The prices of stocks keep changing. Now it’s up to you whether you want to hold or sell your stocks.

If you sell your shares when the price of a share rises,  say 160  then you end up earning 100 Rupees [(160 * 10=1600)-1500=100] and if you sell your shares when the price of a share goes down, say 140 then you end up losing 100 rupees [(140 * 10=1400)-1500= -100]

Note:- No brokerage and other charges were included in the example above.

What’s next? Yes, It’s not the end. You have to monitor the market and manage your portfolio regularly. Buy and sell at right time. Be a good investor and best of luck on your journey.

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5 thoughts on “How to Start Investing in Share Market in India?”


    Thanks for giving me this great knowledge of share market.. Please update me like this day by day…

  2. Abinash Kumar pandey

    I am interesting to enter in share markets .I am a new and don’t know about how to buy and sale share in share give me guide line

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