India’s share market participation has expanded rapidly. The National Stock Exchange reported that unique trading accounts crossed 24 crore in November, 2025. Yet, despite this growth, many investors remain unclear about the actual steps involved in buying shares. This gap often leads to hesitation or basic mistakes. By breaking the process into manageable steps, this guide aims to make share buying easier to understand and more approachable for investors.
What Are Shares and How Do They Work?
A company divides its ownership into small parts called shares. When you buy a share, you own a small part of that company.
Companies sell these shares to raise money for running and growing their business. Investors buy shares hoping the company will do well over time, so the share price appreciates or the company pays them dividends.
In the share market, prices are not fixed. They are influenced by changes in demand, interest rates, earnings results, and economic conditions. Some days are calm. Others move sharply. These movements are not random; they reflect how value is determined in the market.
Owning shares does not guarantee returns. What it guarantees is participation in the company’s journey. Sometimes that journey is smooth. Sometimes it tests patience.
How to Open a Demat and Trading Account
Before buying shares, two accounts are essential: a trading account and a demat account. They work together.
Step 1: Choose a registered stockbroker
The Securities and Exchange Board of India (SEBI) regulates and authorises brokers operating in the securities market. Select a broker that offers a reliable platform, responsive customer support, and a user-friendly interface.
Step 2: Submit KYC details
You will be required to provide your bank account details, PAN, a photograph, and Aadhaar or address proof. The process is typically completed online within a day by most brokers.
Step 3: Open the demat account
After the verification of the KYC details with the broker, your demat account will be opened. It stores your shares electronically and is linked to a depository.
Step 4: Activate the trading account
Now activate the trading account, which enables us to buy or sell shares. Your bank and demat account are connected to this trading account.
Step 5: Link bank account and add funds
Once the linkage is complete, you must add funds from your bank account before placing any buy orders.
With all steps in place, the account setup is complete, allowing you to buy shares through a fully verified digital process without any physical paperwork.
The Process of Buying Shares in the Stock Market
Buying shares follows a fixed structure. No matter which broker you choose, the core process remains the same.
- Log in and select the stock
Access your trading platform and search for the share you want to buy. Review the current price, recent movements, volume, and basic stock details before proceeding. - Decide the quantity
Choose how many shares to buy based on available funds, investment goals, and your comfort with risk. - Select the order type
Decide whether you want immediate execution or prefer to buy at a specific price. This choice determines how quickly the order is executed and at what price. - Order matching and execution
Your order is sent to the exchange, where it is matched with an available seller and executed at the agreed price. - Settlement and ownership
Once the trade is completed, settlement takes place. In India, shares are credited to your demat account on a T+1 basis, meaning one business day after the trade. From this point, the shares start to appear in your holdings.
Different Ways to Buy Shares
There is more than one route to buy shares. Each method suits a different level of involvement and investment style.
Direct Purchase
This is the most commonly used method that involves investors choosing stocks on their own and issuing buying orders through online platforms themselves. This option gives full control and transparency.
Example: Rahul, an investor, buys Reliance shares through a digital platform.
Initial Public Offerings (IPOs)
Shares can also be bought when a company makes an initial offering to the public. Allotment is done in relation to demand and subscription levels, not on a timing basis.
Example: Placing bids in public issues like the Zomato IPO.
Mutual Funds
Rather than picking shares themselves, investors can invest using mutual funds, which provide exposure to different equities. The fund manager is responsible for determining which shares to purchase or sell.
Example: Investing in mutual funds like Parag Parikh Flexi-Cap Fund, Nippon India Small Cap Fund, etc.
Exchange Traded Funds (ETF)
ETFs enable one to purchase a number of shares that track an index or a sector. These instruments can be traded on exchanges like stocks, while spreading exposure across multiple holdings.
Example: Buying index ETFs like the UTI S&P BSE Sensex ETF and SBI Nifty 50 ETF.
How to Choose the Right Shares to Buy
Choosing stocks usually works better when decisions are thought through rather than made on impulse. Several factors combine to shape that decision.
Business Model: It tells how a company produces revenue and supports its regular business activities.
Financial Performance: The revenue and profit statements, along with debt levels, measure how well the business is operated. These figures help in understanding the efficiency and stability.
Valuation: Valuation analysis determines whether a company is fairly priced based on its fundamentals to assess the return potential.
Industry: Industry trends and regulations can also influence how a company operates.
Investment Fit: Consider if the share is suitable for your objectives, risk profile, and investment timeframe.
How to Place an Order to Buy Shares
Placing a buy order follows a clear sequence where careful input matters more than speed.
Step 1: Check the details
Before proceeding, take a moment to review the order carefully. Entering correct details is important, as rushing can lead to errors.
Step 2: Choose quantity and order type
Select how many shares you want to buy and choose the order type. Market orders focus on quick execution, while price-based orders give more control.
Step 3: Place the order
Once confirmed, the order is submitted electronically and sent directly to the exchange.
Step 4: Trade execution
If a seller is available at the chosen price, the trade is executed and confirmation appears on the platform.
Step 5: Order Completion
After execution, the trade is final, and settlement takes place. Changes or cancellations are no longer possible, which is why accuracy is essential.
What Are the Costs Involved in Buying Shares?
Buying shares involves certain transaction-related charges. While they appear small individually, they influence overall returns.
Brokerage: Charges paid to the broker for carrying out the transaction. Discount brokers charge a flat rate, but full-service brokers charge a percentage of the transaction amount.
Exchange Transaction Charges: The stock exchanges levy charges on delivery transactions for equity shares. Currently, NSE charges 0.00297%, while the BSE charges 0.00375%.
Securities Transaction Tax (STT): Charged on equity delivery trades at 0.1% on both the buy side and the sell side.
SEBI Turnover Fees: A regulatory fee of 0.0001% of the transaction value, equivalent to ₹10 per crore.
Stamp Duty: Charged on equity delivery transactions at about 0.015%, with rates varying slightly by state.
GST: Goods and Services Tax at 18% is levied on brokerage, exchange transaction charges, and regulatory fees.
Things to Consider Before Buying Shares
An essential step before buying shares is to take a moment to consider a couple of fundamentals:
Clarity of Financial Objective
There should be a reason for every investment. Whether seeking growth or income, it is easier to focus on investment activity with a defined goal.
Risk Capacity and Stability
Market prices move unpredictably. Understanding personal tolerance for fluctuation is essential for sound risk management of trading, especially during volatile phases.
Portfolio Diversification
Putting the whole capital investment on one stock or sector may increase the uncertainty level. Diversification distributes the risk and forms a well-balanced investment portfolio.
Investment Time Horizon
When investments are held for short periods, price movements tend to appear sharper. A longer horizon provides room for business performance to reflect in valuations.
Regular Monitoring
One should regularly track their investments. Being updated on the business performance and developments helps ensure that the portfolio is aligned with the long-term plan.
Conclusion
Buying shares follows a defined process supported by established market systems. When investors understand how accounts operate, how trades are carried out, and how risks can be evaluated, participation becomes more structured and less uncertain. Over time, consistent decision-making combined with patience and informed assessment helps investors engage with share markets in a more confident manner.
FAQs
You buy shares by opening a demat and trading account, selecting a stock on a trading platform, and placing a buy order at your chosen price.
A demat account holds shares electronically. It replaces physical share certificates and is mandatory for buying or selling shares in India.
Share selection involves understanding the company’s business, reviewing financial performance, checking valuation, and seeing how it fits your investment goals.
No, you can’t buy shares without a broker. All share purchases must be routed through a SEBI-registered broker who provides access to stock exchanges.
You place an order on the broker’s platform. The exchange matches it with a seller, and the shares are credited to your demat account after settlement.
You select the stock, choose quantity and order type, confirm details, and submit the order electronically through the trading platform.
The costs included when buying shares are brokerage, exchange charges, SEBI fees, stamp duty, and GST, all of which affect overall returns.
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