Thread: Getting started in stocks market PartI

Getting started in stocks market PartI

Well this is just another guide to get started in stocks market. There are plenty of them around. But this guide is based on my practical or rather called REALISTIC experience.
You see theory & practical are always different. What most of the people tell you in those guides is all theory. I will try to walk u through the some of the practical things (few in numbers) related to stocks market.

Before entering, expect some grammatical or whatsoever errors possible. My ultimate goal is to convey you the essence. I will put most basic points here, which I think are necessary. For the other qs like whats stocks market? Y stocks prices moves? etc etc u can always use internet.

So lets get started.
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Q.What I need to trade/invest in stocks?
A: Demat & trading account.

Trading account: its accnt where u put all of money u wanna invest/trade in the stocks.

Demat /D-mat/De-mat account:
Its account where shares are stored in dematerialized format. Meaning all the shares are stored in this account in the electronics format. B4 the online trading, most of the ppl used to get the stocks certificate. Now with online trading u don’t need physical certificates any more. U can always convert the certificates to electronic format & store them in ur Demat account. There is a definite fee for the conversion. U can also rematerialize (electronic to physical certificate), but it’s of no use in my view.

NSDL : National securities depository limited.
Web: www.nsdl.co.in

Its like RBI (reserve bank of india) for the Demat accounts. It’s the depository which maintains all the demat accounts. There also presents CDSL, but I prefer NSDL most. So if ur planning to open a demat & trading account insist to get a NSDL accnt.

Q.Where I can open Demat accnt?
A: NSDL offers its service through DPs (depository participants). U can always check the list of the DPs on NSDL. But I will stick to the party which offers both trading & Demat accnt at a time & under same roof.
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Q.How to choose ur broker?
A. Most Most Most important q? trust me.
Let me give u some guidelines for this in following points.
1.As I said try to stick to broker which offers Demat as well as trading accnt. (most of brokers now a days)

2. B4 opening accnt with any broker visit website of broker. This may sound stupid but its worth doing. U can always tell from the website design how professional broker is. I mean professional ppl always hire pros to get there website. From the website quality & contents u can sense whom ur dealing with.
See if the broker offers online web based trading or any special s/w for customers through which they can trade from there home. See also if broker is offering a toll free customer care no or at least a CC no. dial the no at least once & check how they attend ur call. Check if they have IVR (Interactive voice response).
See also if brokers have branches all over the country (check branch locator on website)
A broker with strong branch n/w is always good option in case u change location/city/state.

3. Don’t open accnt with ppl carrying franchise or with sub-brokers, unless u have no choice. At times they can give u worst. U can check (brokers) members here at nse website.

Code:

http://www.nse-india.com/content/members/mem_directory.htm?mos=0

4. NSE trading is far way better than the BSE. So when u open accnt, make sure u have access to both NSE as well BSE. Choose broker who give access to both.

5. A visit to branch office is always wise decision. See how many terminals broker is offering in branch. See if other customers are placing orders there through phone & directly.

6. Most of the brokers have online & offline branches. Now i don’t know y they do it, but I prefer online branch than offline. There present small different between online & offline, but I reckon to increase the competition & attract customers Brokers are dividing the branches.

7. Don't choose De-mats with the banks. like SBI, ICICI. these firms are good as banks,but not as DPs. & they charge u handsomely ( ) for maintaining Demat
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Care to be taken b4 opening accnt.

1. u need to sign lots of paper work. There are at least 20-50 signatures u need to do. And if u look at the form, there are ants all over the form, in form of terms, conditions & rules. I never read any of those T&Cs when I had my accnt. But I sometimes feel stupid for that. If possible, read them. Not all, but at least read T&C in the POA.

2. Whts POA?
A. POWER of ATTORNY: this thing is what I call “pain in the ass”. Any one can understand the meaning of POA. All of the brokers ask u to sign this. They say its part of the formality. But this formality is the root of disaster. If I give them POA, I am authorizing them to operate my accnt w/o my permissions. Most of the brokers get this signed this to avoid all the legal complications. And they say to there will be no AMC (annual maintenance charge ) for Demat, if u sing the POA. I have signed POA for both of my demats accnts.

Lets take example of my two brokers
a) Indiabulls (indiabulls.com)
b) Religare. (religareonline.com)

Y these two? Well I have ongoing demat/trading accnts with these two brokers. And I am happy with there service. It doesn’t mean they are best. In fact for some points there is no broker in whole India who can give u 100% satisfaction. Just remember, in India consumer service is just term we use in dictionary.

Well these two are DPs as well as trading members. It means u can trade/invest (buy sell online) using there service. They will transfer ur shares to ur demat accnt automatically. (of course for that u need to sign POA with them)

My definition of reputed broker
Indiabulls is in other sectors like power & real estate. Its started by three IIT graduates. Has strong branch n/w all across country.
Religare: subsidiary of Ranbaxy (reputed Pharma company). Has strong branch n/w all across country.

Long story cut short: Well there is no harm in signing POA if ur broker is well reputed.
If u want u can pay anaul charges & get rid of POA. Note: this POA is most of the time general & irrevocable (can’t undone, if singed once).

3. Make sure u have assigned the nominee for the Demat account.

4. Do not sign the receive documents in electronic format if u don’t check ur email daily. Or I will say sing such docs for email statements after checking the service for some time. Don’t sign them in first place.
Types of docs: Contract notes, Quartely-Anuual Ledgers etc

5. Last but imp, insist u get a photocopy of all the signed documents & preserve it for future ref. most of ppl ignore this & regret it later.

A very nice pdf on POA by NSE: http://www.nseindia.com/content/assist/asst_faq_poa.pdf
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Few misunderstanding:
Students can't open Demat accnts: Nope any one can. All u need is PAN card.

How can i get PAN card if i am not earning not filing Income Tax return?
PAN is Permanent accnt no & doesn't necessarily mean u shud start filing IT return if u've PAN. students can borrow some money from there seniors & can invest in market. can earn profit & there is no issue with IT, if ur income is under limit.

I need to have certain xyz amount to start investing: nope. i started my first investment with 150 Rs. for accnt opening u need to give check of particular (differ from broker to broker) amount till ur accnt gets activated. then u can withdraw that amount (vrokers cut fees for accnt opening, which again differ from broker to broker) if u want. u can buy whatever stock u want. stock available from range of 10 paisa to 10k. its ur wish.

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I will write how to start investing/trading in another article. If u have any qs, I will be happy to answer them. But remember stick here to qs related with accnts opening & pre requirement. It took me lot of time to write this article, so r word of appreciation will definitely help me further.


U can also check NSE investor center for most of the technical problems
NSE - Investors' Centre - Investor Grievance Cell

PS: This article is for information purpose only.Please don't make any decisions based on this article. Use your own sources to verify things & before making any decision.