Many first time investors in equity market often ask the question,’ How should they buy shares?’. Basically they want to understand the process through which shares are bought and sold in the stock market. Buying shares is not a rocket science, though buying good shares is definitely very challenging job. However, let us first look at the process of buying shares. As an investor into stock market, you need to open three accounts 1) Bank account, 2) Demat Account and 3) Broking account. Many broking companies have online trading platform which offer this facility online. For example, ICICI Securities, Kotak Securities, Sharekhan etc. However, the largest broking firm may not be best form for you, so check for costs involved in the services that you get or go for discount brokers like Tradejini,Zerodha,RKSV.
Also read the document you are signing when you enter into agreement with these broking while opening 3-in-1 account. Most of these broking firms ask for power of attorney to operate your account. Check out the legal details with respect to power of attorney. Additionally, check for the bouquet of services offered by broking firms which means what are services they provide along with share trading account.
If you decide to open an online broking account, you can operate this account with the help login id and password. In offline accounts, you will need to call your broker and place orders on telephone. Please note that when you open an account, you are offered a unique client code (UCC). This becomes your code for operating offline account most of the time. Once you place an order, whether offline or online, your order gets stored in the stock exchange system. It gets executed when the price and the quantity of shares mentioned by you matches with the sell order. The match can happen with one sell order or multiple sell order.
After the execution or buy order, you will receive shares in your demat account after 2 days. This system of transaction in shares in India is called as T+2 settlement cycle. Once shares move into your demat account, you become beneficial owners of those shares. This is the stage when you have become owner of shares in the record of the concerned company. After this, you can decide to sell the shares at the time of your choice. The process followed will be again same as that of buying shares.