These days, the Indian stock market is on a serious upward trend. Demat accounts plunged to 370% from 39.3 million to over 185 million between 2019 and 2024.

Thanks to how easy investing is, this surge is possible. Currently, the market is actually accessible both to rookies and those with experience due to handy mobile apps.

Therefore, it’s okay if you are starting out and want to learn how to invest in the share market. Here, we are giving you this guide so that you can invest in Indian stocks. 

We’ll lay out the top rules to follow and the best tips to help you invest with little to no money in hand, no matter your budget or goals.

How to Start Investing in Shares

Know the Rules

SEBI is India’s main financial market regulator. It protects investors and ensures that markets work fairly. It also monitors companies and brokers and requires them to share important information regularly. 

If someone breaks the rules, SEBI can take action against them.

The Reserve Bank of India (RBI) manages the country’s banking system. It controls how money moves in and out of the country, including when Indians want to invest abroad. The RBI also ensures that digital payments like UPI work safely.

NSDL and CDSL convert paper share certificates into digital form in demat accounts. This makes buying and selling shares faster and safer.

Must-Follow Requirements

Before investing, you must complete KYC (Know Your Customer). This means linking your PAN card and Aadhaar. It helps prevent fraud and makes sure each investor can be identified.

If you want to invest in foreign markets, you’ll need to follow the Liberalised Remittance Scheme (LRS) rules. This sets limits on how much money you can invest abroad.

There’s a special type of Demat account called BSDA (Basic Services Demat Account) for new investors with small amounts to invest. It has lower fees than regular demat accounts, making it easier to start investing without spending much on charges.

First Steps in Share Market Investing

Set Up Your Trading Account

Are you ready to start trading stocks? The first step is to open a trading account. Choose a broker registered with SEBI to guide you through the stock market jungle.

Preferably, Zerodha, Upstox, and Angel Broking are the most popular. Secondly, they have very competitive prices and user-friendly apps that make trading easy.

To open your account, just:

• Fill out your details online
• Provide your ID proof that is PAN card and your Aadhaar.
• Upload proof of your address
• You can connect your bank account using UPI or net banking

After your documents have been verified, your broker will activate your account, and within 2 to 3 days, you will be up and running, buying and selling stocks.

Basic Terms You Should Know

Let’s understand some basic stock market terms:

• Equity Shares: When you buy a company’s shares, you own a small part of that company. Regular shares let you vote in company decisions, while preferred shares usually give you fixed payments instead.
• ETFs: These are like baskets of different stocks you can buy in one go. For example, Nifty Bees lets you invest in India’s top 50 companies at once.

Common Market Terms:

• Bid Price: What buyers want to pay
• Ask Price: What sellers want to receive
• Lot Size: Minimum number of shares you can buy
• Circuit Limits: How much a stock’s price can move up or down in one day

How to Buy and Sell Shares Online

Buying and selling stocks online is straightforward with modern trading apps. Here’s what you need to know:

When placing orders, you have three main options:

• Market orders: Buy or sell right away at current prices
• Limit orders: Buy or sell only at your chosen price
• Stop-loss orders: Sell automatically if the price drops too low

Before buying any stock, do your homework. Check the company’s performance and read financial news using the research tools in your trading app.

When you buy a stock, everything takes two business days to complete. The shares go into your demat account, and the money comes from your bank account.

Most trading apps show you live stock prices and let you track how your investments are doing. They also provide charts and company information to help you make better decisions.

Also Read : How to Invest in Nasdaq from India

Different Ways to Invest Based on Your Goals

Short-Term Trading (Days to Weeks) 

If you are only into short-term trading, you will have to be glued to the market every single day. There are two main styles:

Swing Trading: In a swing trend, you buy stocks and hold them for 2 to 30 days or 3 to 4 weeks to make money from normal price movements.

Intraday Trading: That means that you buy and sell the stocks on the day itself. This method is pretty intense because you have to watch the prices all day long, so try to do that only after you have some experience. For short-term trading, you should:

• Read charts and learn to know of price trends.
• Protect your funds with set clear stop loss points
• Read the daily market news

Long-Term Investment (Years) 

For the most part, long-term investment is more relaxed and safer, requiring less day-to-day attention. Here are some popular strategies:

Value Investing: Look for solid companies whose stocks look undervalued. This is like seeking a deal in a sale. You buy, but you wait until the market catches on.

Focus on rapidly growing companies. Now, they may seem pricey, but their growth can truly add value in the future.

Dividend Investing: Investing in stable companies that regularly pay dividends. Regardless, these companies are stable companies, and a steady income is good for long-term goals like tending to your retirement.

It’s wise for beginners, or any bear, to invest in the market as he is not able to watch the market every moment.

Investing with Small Amounts of Money

Regular Monthly Investments (SIPs)

SIPs (Systematic Investment Plans) are a simple way to start investing in stocks with small amounts of money. You invest a fixed amount regularly – like monthly or weekly.

The best part? You don’t need to worry about perfect timing. When stock prices are low, your money buys more shares. When prices are high, you buy fewer shares. This helps balance out your costs over time.

Many investing apps now let you buy parts of expensive stocks. This means you can own popular stocks even with small amounts of money.

SIPs help you build good investing habits and grow your money steadily over time, making them perfect for beginners.

Invest in Smaller Companies

Small and mid-sized companies offer different opportunities than big companies. While they have the potential for faster growth and higher returns, they also carry greater risks.

These stocks can be more volatile because:

• Fewer people trade them
• Their prices change quickly with the market mood
• They’re more sensitive to economic changes

Before investing in smaller companies:

• Study their business thoroughly
• Check if their industry is growing
• Look at who their competitors are

Don’t put all your money in one small company. Spread it across different types of small businesses. If one company struggles, the others might make up for it.

Find Low-Cost Trading Options

You don’t need to spend a lot on trading fees anymore. Many brokers now offer very low fees or even free trading. This helps you keep more of your investment profits.

But watch out for hidden costs. 

Check for:

• Account maintenance fees
• Transaction taxes
• Withdrawal charges

Don’t just go for the cheapest option when picking a trading platform. Make sure they also offer:

• Good research tools
• Easy-to-use trading screens
• Helpful customer support
• All required security features

This way, you can trade affordably while still getting all the important features you need.

Also Read : How to Invest in US Stocks From India

Know Your Taxes and Stay Compliant

When you make money from investments in India, you need to pay taxes on your profits. These are called capital gains taxes.

If you sell investments within one year, you’ll pay short-term capital gains tax, which is about 15% on stocks. But if you hold them longer than a year, you’ll pay less – usually 10% on profits above a certain amount.

When companies pay you dividends, you’ll need to pay tax based on your income tax bracket. This is a recent change, as dividends used to be tax-free.

Keep good records of when you buy and sell investments, including all prices and fees. Many brokers give you reports to help with this. It makes filing your taxes much easier and helps you stay within the law.

Protect Your Investments

Let’s remember there are two kinds of risks to bear in mind.

The first is that systematic risk affects the whole market—things like economic downturns or inflation—and you simply can’t avoid them.

There is also an unsystematic risk that is industry or company-specific. You can manage this risk by diversifying your investments.

Make unilateral investments across different asset types (say, stocks, bonds, gold, etc.). That way, if one investment goes south, the others can ease the fall of harm.

Furthermore, trading with stop-loss orders allows buying and selling at predetermined prices, so stop buying your stocks when they make you lose a lot.

Above all, try to fight emotions while making decisions. Stick to one good plan, follow it, and choose based on good research.

Also Read : What are the Legal Forex Pairs in India

Next Steps

Are you ready to enter the Indian share market? You just need to remember that you must follow the rules set by SEBI and RBI, which are set to secure your interest and ensure the fairness of the market.

Here’s what to do next:

• Do thorough research before taking any steps
• Know the basics and the risks associated with it.
• If you need some extra help, you may consider chatting with a financial advisor.

Begin today, don’t hesitate to take that first step, be informed, and obey the rules. You have arrived at the first step to building wealth.