Finance

A Smart Way To Invest Stock Market In India

Stock markets in India are facing upheaval ever since the year started. Owing to the pandemic and related business cycles, the markets are facing an inflow of new investors as the prices of most stocks are low. This has given a new impetus to the brokerage houses offering online trading accounts

If you are a newbie investor looking to start trading online, do look at various options at broking houses and styles of trading. There are primarily two ways of trading –

    1. Intraday TradingIntraday trading refers to the buying and selling off of a stock market position on the same day on the stock exchange. There is no ownership of shares that changes hands and at the end of the day, the net position is zero as there is no debit or credit of shares. However, day trading is the riskiest of all and only people experienced in trading should undertake it.
    2. Short -term trading – This involves buying shares for a period of up to three years. Stocks invested for less than three years have to pay short-term trading gains of 10%.
    3. Long term trading – This involves holding stocks for a period longer than three years of time. You do not have to pay taxes on the trading gains if you hold the stocks longer than three years. 

Methods of Investing in the Stock Market

You can invest in the stock market in the following ways –

  1. Direct equity – You can open a Demat and trading account with any of the brokerage houses and start trading with a minimal amount. Ensure to understand the charges for Demat and subscription or commission for trading. Among all the available options, the Bajaj Financial Securities Limited (BFSL) Demat account offers the most competitive option in terms of charges and subscription packages available for newbie as well as experienced traders and investors. You can save up to 99% brokerage for delivery trades with BFSL.
  2. Mutual Funds – This is a smart tool for investors who do not have the time to track individual stocks and can take advantage of monthly investment methods of SIP (Systematic Investment Plan). Mutual funds can be picked up as per their goals or themes. These can be held as per the investing goal and also transferred or switched between funds of the same fund house. You can look for companies in a specific sector or theme such as real estate, ESG (Environmental, Social, and Corporate Governance) based companies, and various others. 
  3. ETF (Exchange Traded Funds) – These are funds that are traded on the exchange and are replicas of an index of a certain category of funds. They are known to provide good returns over a period of time and are a good source of passive income. You can stay invested in ETFs such as for gold, BSE, or NSE indices. 

Through research and collating knowledge on various aspects of stock trading, you can start understanding the nuances of stock picking. Trading in stock markets is about picking a style of trading so you know that you are not over-investing and risking your savings. 

Stocks are the basis of many new investment ideas available with brokers. You can buy stocks in small units as well and now even do a SIP of a fixed sum of money in a predetermined list of stocks. Thus there are many ways to stay invested in stocks in India. 

NRIs (Non-resident Indians) can also open a Demat and trading account using their specific accounts. They are allowed to invest in stocks, provided they file for taxes in India. You can explore the various types of Demat accounts and also the rules and regulations around stock investing in India.

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