TomorrowMakers

Here’s what a woman needs to do if she wants to become an expert in individual stock investing.

How women in India can invest in individual stocks

You can now start investing in the stock market quite easily, thanks to the digitised nature of trading these days. Any woman – whether she’s a homemaker or career woman or business owner – can set aside a portion of her earnings or savings to invest in stocks. Investing in individual stocks will make you a shareholder in the company and more participative in your investments. 

Stock investments will broaden your understanding of the companies you invest in, plus a familiarity with the industry, economy and socioeconomic factors that influence the share market. The effects of a Sino-American trade war, for instance, will suddenly be of keen interest to you. All this will come naturally when you learn how to trade stocks.

You can make investments in equities (in the form of equity mutual funds) with the help of asset managers. However, individual stocks remain the most dynamic form of investment. They come with certain risks but also generate high returns. Here are some steps every woman should follow if they wish to know how to start trading in stock market.

Select the right broker

It is not possible to invest in stocks directly without selecting a share broker. Brokers, including online stockbrokers, are authorised by the Securities and Exchange Board of India (SEBI) to trade on behalf of investors. Selecting the right broker is important. A housewife with little understanding of the share market may prefer a broker who is known to provide good tips and insights. A working woman may prefer a broker who provides good trading tools and analytics. Yet another may consider a broker with the most cost-efficient service. Established brokers like Kotak Securities combine cost-efficiency with reliable information. It provides zero-fee intraday trading and only Rs 20 on other F&O trades. The Kotak Research Centre provides stock recommendations, live calls, webinars, and research reports, helping you make more informed trading decisions. Open Demat Account Online For Free

Related: 25 Stock market terms for beginners

Prepare your documentation 

You must have your ID and address proof ready before taking the first steps towards stock investment. These are the typical KYC documents that you may have provided at the time of opening your bank account. Besides, you will need to give your broker your PAN, along with the identity and address proofs. You can opt for e-KYC with your Aadhaar and link it with your PAN and bank account. 

Apply for a demat and trading account 

Shares are no longer held physically, instead, they are owned in a dematerialised form. A demat account is like an inventory ledger that holds the shares owned by you. If you sell a share, the same will be updated and reflected in your demat account. The actual buying and selling in a stock exchange happens through a trading account. When you approach a share broking firm, it will open a demat account and a trading account in your name. Understand the basics of a Demat account

Know your depository participant

Although it’s not important from a day-to-day share trading perspective, you should know who your depository participant is. When any of the stock broker companies open a demat and trading account in your name, it also registers you with a depository. There are two depositories in India – National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). Both have participating agents under them who hold and release the shares bought and sold by investors.

Related: How to invest in stocks like a pro

See if you can benefit from a UIN

If you are a housewife who is just starting off in the share market, a Unique Identification Number (UIN) is probably overkill. But this will be required if you trade an amount of Rs 1 lakh or more in a single transaction. The broking firm will generally take care of your UIN if you ever require it.

Buy and sell your preferred stocks

After your initial research, you can select which stocks to buy today. You have to look at the current share price and buy the shares or set a target price at which you wish to buy. For example, you can set a target price of Rs 250 for a share whose present price is Rs 255. Set the buying price and the number of shares by logging into your account; the transaction will happen in real-time. Follow the same procedure while selling the shares you own. 

Related: Are bonds really safer than stocks?

Adopt a trading style of your own 

There are different approaches to stock trading. As a woman who is just starting to invest in shares, the ideal approach would be delivery trading. This involves keeping a long-term horizon where you buy and hold a share and wait for it to appreciate. The opposite of this would be intraday or day trading. You can buy and sell several times during a single workday once you get a good understanding of the market movements. Your trading style will dictate the trading product you choose. Different trading products include cash and carry, normal order, margin intraday square-off, bracket order, etc.

With these steps completed and a portfolio created, it is now up to you to conduct regular monitoring and trade from time to time. Over time, you will start earning from the market movements through your investments in the stock market. Do you make these excuses for not investing in stock markets?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.