How to Buy Shares

To buy shares, open a brokerage account, fund it, research stocks, and place an order (market or limit). Then, monitor your investments regularly.
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How to Buy Shares
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3 mins
29 Oct 2024

The process of buying shares online is simple and hassle-free. Online discount brokers have driven orders of new investors to join the stock market. Buying and selling shares online has emerged as an attractive form of investment in the recent past. The conventional way of growing your savings such as Fixed Deposits, does not provide lucrative returns these days due to growing inflation. Investors today, look for more promising forms of investment which can give them a good return on their investment. The stock market has lived up to this reputation gaining more popularity among retail investors. This article is your step-by-step guide on how to buy shares online without a broker.

Pro tip

Invest in equities, F&O, and upcoming IPOs effortlessly by opening a Demat account online. Enjoy a free subscription for the first year with Bajaj Broking.

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How to buy shares online without a broker?

Here is how you can buy shares online without a broker-

1. Getting a PAN Card

A Permanent Account Number (PAN) is mandatory to buy shares online. It is a unique, 10-digit alpha-numeric number that is provided by the Government of India. PAN Card is needed for availing of financial services in India.

2. Open a Demat Account

Opening a Demat Account is the next important step to buy shares online. A Demat account is required to store your shares online. Previously, shares existed in a paper- format which had its share of risk in terms of physical loss of the document.

3. Open a Trading Account

You cannot place orders to buy/ sell shares in the stock market without a trading account and it is mandatory to create one for buying and selling shares.

4. Register with a Broker/ Brokerage Platform

A broker/ brokerage platform is authorised by SEBI (Securities and Exchange Board of India) to facilitate the buying and selling of shares. You can open a Demat and Trading A/C with the help of a broker/ brokerage firm to buy shares online. Open a Demat and Trading Account with us in just a few steps.

5. You will also need a bank account

Along with a Demat and Trading Account, you will require a bank account to buy shares online in India. It is mandatory to link your bank account with the trading account. All the shares will be bought and sold from your trading account however, the amount required to buy the shares online will be -transferred to your trading account through your bank account.
If you have adhered to all the steps above, you will be equipped with all the requirements to buy shares online. The next step will be to login into your Demat and Trading account with your broker/ brokerage platform and buy the share of your choice.

6. Get your Unique Identification Number (UIN)

UIN or Unique Identification Number is a SEBI mandate. This measure has been taken to maintain an extensive database of all market participants. A UIN can be obtained from a POS agent setup by the NSDL. A UIN is a prerequisite only if you are trading with a capital of more than Rs.1 Lakh. It allows users to claim for a tax refund.

Things to Keep in Mind Before Investing

  • Find the right broker/ brokerage platform: It is critical to find the right broking partner as there are brokerage fees involved in every trade that you participate in. Bajaj Financial Securities Limited understands the customer needs and has one of the lowest brokerage fees in the market. It also provides you with various investment instruments to choose from. You can invest in equities, derivatives, etc. Start your investment journey now.
  • Define your goals: Every individual investor should define their goals before they start investing. The goal can be targeting a specific stock-price- within a timeframe. It is important to invest with an objective rather than randomly buying and selling shares. This will ensure a more disciplined approach to your investments.
  • Adequate research: There is no alternative to research, and you should research thoroughly before investing in any stock. It is important to know company details, history, and past performance of the stock. Dive a little deep to understand the sentiment surrounding that stock before you invest.
  • Manage your risks wisely: Risk management is a key attribute in the equity market and volatile price movements can unsettle you. Thus, it is very important to manage your financial risks wisely. With online brokerage platforms, you get the feature to put a stop-loss order which will restrict your losses in case of major price fluctuations. Use features like Alerts and the Latest News on the BFSL trade app to stay on top of your investments. Download the app now.

Strategies to buy shares

Here are some common strategies used by investors to invest in shares:

1. Long-term investing:

  • Embrace a buy-and-hold approach, focusing on the long-term growth potential of Indian companies.
  • Consider blue-chip stocks with a history of stability and consistent performance.

2. Market timing:

  • Employ market timing strategies by identifying entry points during market corrections or consolidations.
  • Conduct technical analysis to gauge optimal entry points.

3. IPO investments:

  • Participate in Initial Public Offerings (IPOs) of companies entering the market.
  • Research the company's fundamentals and growth prospects before subscribing to an IPO.

4. Quality analysis:

  • Conduct thorough fundamental analysis to assess the financial health and management quality of Indian companies.
  • Evaluate factors such as earnings growth, debt levels, and corporate governance.

5. Diversification:

  • Diversify your portfolio across various sectors and industries to mitigate risk.
  • Avoid overconcentration in a specific stock or sector.

6. Government policies and reforms:

  • Stay informed about government policies and economic reforms impacting specific industries.
  • Anticipate sectors that may benefit from policy changes or government initiatives.

7. Technical analysis:

  • Use technical indicators and chart patterns to analyse stock price movements.
  • Identify support and resistance levels, trends, and potential entry points based on technical signals.

8. Risk management:

  • Set stop-loss orders to manage downside risk and protect investment capital.
  • Establish a risk-reward ratio before making investment decisions.

Conclusion

Buying shares online in India has become incredibly convenient and accessible. By following the steps outlined in this guide, you can start your investment journey with ease. Remember to do your research, choose a reliable broker, and invest wisely.

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Frequently asked questions

how to buy shares in a company?

Buying shares is an exciting venture, opening doors to potential financial growth and investment opportunities. Whether you are aiming to build a robust portfolio or simply looking to make a few strategic investments, understanding the process of buying shares is essential. Buying shares means purchasing a stake in a company.

To start, you need to:

  1. Choose a broker: Select a reputable online broker that aligns with your investment goals.
  2. Open an account: Complete the registration process, providing the necessary documents.
  3. Deposit funds: Transfer money to your brokerage account.
  4. Research: Analyze different companies and industries.
  5. Place an order: Decide on the number of shares and place your order.
  6. Monitor your investment: Regularly check the performance and adjust your portfolio as needed.
Can I buy stocks online without a broker?

No, to buy stocks, an investor needs to open a Demat account and a trading account, which is provided by a broker.

Are stocks and shares the same thing?

Yes, stocks and shares are essentially the same thing. They both represent ownership in a company. However, there's a slight nuance:

  • Shares: Refers to a specific unit of ownership in a single company.
  • Stocks: Is a broader term that encompasses ownership in one or more companies.

In essence, stocks are a collection of shares in different companies. Understanding this distinction can help you navigate the stock market more effectively.

How will I know when to sell stocks?

To decide when to sell a stock, consider these factors:

  • Price Targets: Sell when the stock reaches your profit target or falls below your loss limit.
  • Company Performance: Monitor financial health and management changes.
  • Market Trends: Consider market corrections and sector-specific trends.
  • Investment Goals: Align selling decisions with your long-term or short-term goals.
  • Personal Needs: Sell if you require immediate liquidity.

Remember, timing the market perfectly is challenging. Focus on investing in quality companies and a long-term perspective.

What is a dividend?

A dividend is a distribution of a portion of a company's profits to its eligible shareholders, usually in the form of cash or stock. It is a way for companies to share their earnings with the investors who own a stake in the company. The amount of dividend that a shareholder receives depends on the number of shares they own, and the dividend payout ratio determined by the company's board of directors.

What is bonus share?

Bonus shares are essentially additional shares issued by a company to its existing shareholders at no extra cost.

What kind of stocks to choose from for intraday trading?

For intraday trading, opt for highly liquid stocks. Liquidity is vital to ensure swift order execution without significantly affecting market prices. Trading illiquid stocks can lead to difficulties in finding a seller by the end of the market hours, impacting intraday outcomes. Focus on stocks with high liquidity for efficient and seamless transactions.

Why do I require a trading account to buy and sell shares?

A trading account acts as a link between your Demat and bank accounts. It facilitates the buying and selling of shares, holding funds for purchases, and ensuring smooth share transfers to and from your Demat account. The trading account is a crucial platform that connects the financial elements needed for stock trading, enabling seamless transactions.

What is meant by market order in the process of buying and selling shares?

A market order instructs brokers to immediately buy or sell stocks at the prevailing market price. It prioritises speed of execution over a specific price, ensuring swift fulfilment. Market orders suit investors focused on quick execution, placing less emphasis on the exact transaction price.

What is meant by limit order in the process of buying and selling shares?

A limit order allows investors to specify the desired price and quantity of shares. Unlike market orders, it executes only when the market price reaches the predetermined level set by the investor. Limit orders provide greater control over trade execution, allowing for precise entry and exit points based on specified price levels.

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