Want to start investing in the stock market? Learn how to buy and sell shares step by step with practical examples. Discover how to open a Demat and Trading Account, choose stocks, place buy and sell orders, understand brokerage charges, and avoid common mistakes as a beginner.
How to Buy and Sell Shares in the Stock Market: A Complete Beginner's Guide
Have you ever wondered how people buy shares of companies like Reliance, Tata Motors, Infosys, or Apple and make money when their prices increase? Perhaps you have heard friends or family members talking about investing in the stock market, but you are still unsure about how the entire process works.
The good news is that buying and selling shares is much easier today than it was a few years ago. You no longer need to visit a stock exchange or deal with complicated paperwork. With a smartphone, an internet connection, and a Demat and Trading Account, you can buy or sell shares from almost anywhere.
However, knowing which buttons to press is only one part of investing. You should also understand how share prices work, how to choose stocks, what happens after placing an order, and how to avoid common mistakes.
In this beginner-friendly guide, we will explain how to buy and sell shares in the stock market, step by step, with practical examples.
What Are Shares and How Does the Stock Market Work?
Before buying your first share, it is important to understand what you are actually purchasing.
A share represents a small ownership stake in a company. When you purchase shares of a publicly listed company, you become one of its shareholders.
For example, imagine a company has issued 10 million shares. If you purchase 100 shares, you own a small portion of that company.
As the business grows, earns profits, and attracts more investors, its share price may increase. If you sell your shares at a higher price than you paid, you can make a profit.
However, share prices can also fall. If you sell your shares for less than your purchase price, you will incur a loss.
In India, investors generally buy and sell listed shares through stock exchanges such as:
NSE (National Stock Exchange): One of India's major stock exchanges.
BSE (Bombay Stock Exchange): One of the oldest stock exchanges in Asia.
Investors cannot normally purchase listed shares directly from another investor through an ordinary retail transaction. Instead, they place orders through a registered stockbroker connected to the exchange.
What Do You Need Before Buying Shares?
You need a few basic things before you can start investing in the Indian stock market.
PAN Card: A Permanent Account Number is generally required to open an investment account in India.
Bank Account: Your bank account is used to transfer money to your broker and receive eligible withdrawal proceeds.
Demat Account: A Demat Account holds your shares electronically. Think of it as a digital locker for your investments.
Trading Account: A Trading Account allows you to place buy and sell orders through a stockbroker.
Mobile Number and Email Address: These are used for account verification, transaction alerts, and important communications.
You will also need to complete the broker's KYC verification process. Depending on the broker, this may include identity verification, address details, bank verification, and other required information.
How to Open a Demat and Trading Account
You cannot normally buy listed shares in India through a regular bank account alone. You need a Demat and Trading Account with an eligible stockbroker.
Several popular platforms provide online account-opening services.
Some commonly used Indian stockbrokers include:
Zerodha
Groww
Upstox
Angel One
ICICI Direct
Before choosing a broker, compare its brokerage charges, account maintenance fees, customer support, trading platform, security features, and applicable transaction charges.
Here is how the account-opening process generally works:
Choose a Stockbroker: Visit the official website or download the official application of your preferred broker.
Enter Your Details: Provide your name, mobile number, email address, PAN details, and other requested information.
Complete KYC Verification: Verify your identity and address using the available digital verification process.
Add Your Bank Account: Link your bank account so you can transfer funds and receive eligible payouts.
Complete Account Verification: Follow the broker's instructions for any additional verification, including electronic signatures.
Wait for Activation: Once your application is approved, you will receive your account details and login credentials.
After activation, you can access your trading platform and start exploring the stock market.
Remember to verify that the broker is registered with SEBI and that you are using its genuine official application or website.
How to Add Money to Your Trading Account
After opening your account, the next step is to add money to your trading balance.
Most Indian brokers provide several funding options, depending on their supported payment facilities.
Common methods include:
UPI payments
Internet banking
IMPS or NEFT
Other supported bank transfer methods
For example, suppose you want to invest ₹5,000 in shares. You can transfer ₹5,000 from your linked bank account to your broker's trading account.
Once the funds are successfully credited, you can use your available trading balance to place eligible buy orders.
One important point: Do not deposit your entire savings into the stock market. Keep enough money for household expenses, emergencies, and other financial responsibilities.
It is generally better to begin with a small amount that you can afford to invest for the long term.
How to Find the Right Shares to Buy
Having a trading account does not mean you should immediately purchase the first popular stock you see.
Choosing the right company is one of the most important parts of stock market investing.
Before purchasing a company's shares, consider the following factors:
Understand the Business: Learn what the company sells, how it earns money, and whether its products or services have long-term demand.
Check Financial Performance: Look at revenue, profits, debt, cash flow, and business growth.
Study the Company's Management: A company's leadership, business decisions, and corporate governance can influence its long-term performance.
Compare Valuation: A good company is not necessarily a good investment at every price. Compare its valuation with its financial performance and similar businesses.
Check Industry Conditions: Understand whether the industry is growing, facing competition, or dealing with regulatory challenges.
For example, suppose you are interested in purchasing shares of an automobile company. Before investing, examine its vehicle sales, profitability, debt, market position, and future business plans.
You do not need to become a financial expert overnight. Start by learning how to read basic company information and gradually improve your research skills.
How to Buy Shares in the Stock Market
Now comes the practical part. Once your Demat and Trading Account is active and you have added money, you can purchase shares online.
Follow these steps.
Log In to Your Trading Application
Open your broker's official mobile application or website and log in using your registered credentials.
Search for the Company
Use the search bar to find the company whose shares you want to purchase.
For example, if you want to buy Reliance Industries shares, search for Reliance Industries and select the correct NSE or BSE listing.
Always double-check the company name and exchange before proceeding.
Check the Current Share Price
The application will display the latest available market price.
For example, imagine Reliance Industries is trading at ₹1,400 per share. This is only an illustrative price, not a live market quote.
Click the Buy Option
Open the stock details and select the Buy option.
Enter the Number of Shares
Decide how many shares you want to purchase.
Suppose you want to buy five shares at ₹1,400 each.
Your estimated purchase value will be:
5 × ₹1,400 = ₹7,000.
Additional brokerage and statutory charges may apply.
Choose Your Order Type
Most trading platforms offer different order types.
Market Order: Attempts to execute your order at the best available market price. The final execution price may differ from the displayed price.
Limit Order: Allows you to specify the maximum price you are willing to pay when buying shares.
Stop-Loss Order: Helps trigger an order when a specified price condition is reached, subject to the order type and market execution conditions.
For beginners, understanding the difference between market and limit orders is particularly important.
Select Delivery or Intraday
If you want to purchase shares and hold them for several days, months, or years, select the applicable delivery or CNC option.
If you want to buy and sell shares within the same trading session, you may select intraday or MIS, depending on the broker.
Beginners should understand the risks of intraday trading before using it.
Review and Confirm Your Order
Check the stock name, quantity, order type, price, and estimated charges.
Once everything looks correct, submit your buy order.
If the order is successfully executed, you can check its details in the order book and your holdings section.
Congratulations! You have completed your first share purchase.
Practical Example of Buying Shares
Let's understand the buying process with a simple example.
Suppose you have ₹10,000 available for investing and want to purchase shares of a company trading at ₹500 per share.
You decide to buy 10 shares.
| Details | Amount |
|---|---|
| Share purchase price | ₹500 |
| Number of shares | 10 |
| Total purchase value | ₹5,000 |
| Remaining balance | ₹5,000 |
You now own 10 shares of that company, subject to successful execution and settlement.
If the share price increases to ₹600 and you sell all 10 shares, your selling value will be ₹6,000.
Your gross profit will be:
₹6,000 − ₹5,000 = ₹1,000.
This is your profit before brokerage, taxes, and other applicable charges.
Similarly, if the share price falls to ₹400 and you sell all 10 shares, your gross loss will be ₹1,000.
This example shows why understanding risk is just as important as understanding profit.
How to Sell Shares in the Stock Market
Buying shares is only half of the process. You also need to know how to sell them when you want to exit an investment.
Selling shares through a trading application is generally straightforward.
Here is how the process works.
Open Your Trading Application
Log in to your broker's platform using your registered account.
Go to the Holdings Section
Find the holdings or portfolio section. It displays the shares you own in your Demat Account.
Select the Company
Choose the stock you want to sell.
For example, if you purchased 10 shares of Tata Motors, select Tata Motors from your holdings.
Click the Sell Option
Select Sell to open the order screen.
Enter the Quantity
Decide how many shares you want to sell.
You can sell all your shares or only a portion of your holdings, depending on the available quantity and applicable conditions.
Choose the Selling Price
You can generally choose a market order or a limit order.
A market order attempts to sell at the best available market price, while a limit order lets you specify the minimum selling price you are willing to accept.
Review and Confirm
Check the stock name, quantity, order type, and estimated charges.
Submit the order after confirming the details.
If your order is executed, the transaction will appear in your order book or trade book.
The proceeds will be credited according to the broker's payout process and applicable settlement rules.
Practical Example of Selling Shares
Imagine that you purchased 20 shares of a company at ₹250 per share.
Your total purchase value was:
20 × ₹250 = ₹5,000.
After a few months, the share price increases to ₹320.
You decide to sell all 20 shares.
Your selling value will be:
20 × ₹320 = ₹6,400.
Your gross profit will be:
₹6,400 − ₹5,000 = ₹1,400.
However, your actual profit will be lower after deducting applicable brokerage, exchange charges, taxes, and other transaction costs.
Now imagine the share price falls to ₹200 instead.
If you sell your 20 shares at that price, you receive ₹4,000 before charges and incur a gross loss of ₹1,000.
Remember, profits are not guaranteed, and share prices can move in either direction.
Difference Between Delivery and Intraday Trading
There are two common ways retail investors trade shares in the stock market: delivery-based trading and intraday trading.
Although both involve buying and selling shares, their purposes and risks are different.
| Feature | Delivery Trading | Intraday Trading |
|---|---|---|
| Holding period | Multiple days or years | Same trading session |
| Main purpose | Investing or holding shares | Short-term price movements |
| Ownership | Shares are credited to Demat after settlement | Usually no long-term shareholding |
| Risk | Market risk over the holding period | Higher short-term price and execution risk |
| Suitable for | Investors with a longer-term approach | Experienced traders |
| Overnight position | Yes | Normally squared off before the session ends |
For beginners, delivery-based investing is generally easier to understand than intraday trading.
Intraday trading requires market knowledge, discipline, risk management, and the ability to handle rapid price movements.
Do not assume that intraday trading is an easy way to earn daily income.
What Is the Settlement Process After Buying or Selling Shares?
When you purchase or sell shares, the transaction does not always become fully settled immediately.
In India, the standard settlement cycle for most eligible equity trades is T+1.
This means settlement generally takes place on the next working day after the trade date, subject to exchange holidays and applicable settlement rules.
For example:
Suppose you purchase shares on Monday. The settlement generally takes place on Tuesday, assuming both days are working days.
After settlement, eligible purchased shares are credited to your Demat Account.
Similarly, when you sell shares, the sale proceeds are processed through the applicable settlement and broker payout process.
Some exchanges and brokers also offer optional faster settlement facilities for eligible transactions. Therefore, always check the actual settlement and payout details provided by your broker.
Charges and Taxes When Buying and Selling Shares
Many beginners focus only on the share price and forget about transaction costs.
However, every stock market investor should understand the charges involved.
Some common charges in India include:
Brokerage: The fee charged by your broker for executing eligible transactions.
STT: Securities Transaction Tax applicable to specified securities transactions.
Exchange Transaction Charges: Fees charged by the stock exchange.
GST: Applicable GST on specified services and charges.
SEBI Charges: Regulatory fees applicable to transactions.
Stamp Duty: Applicable on eligible purchase transactions.
DP Charges: Depository participant charges that may apply when selling delivery shares.
Capital Gains Tax: Tax on eligible profits from selling shares, depending on the holding period and applicable tax rules.
The exact charges depend on the broker, transaction type, exchange, and prevailing regulations.
Before investing, check your broker's latest charges page and understand the applicable tax rules.
Common Mistakes Beginners Should Avoid
Many people enter the stock market hoping to make quick profits. Unfortunately, a lack of knowledge and poor decisions can lead to unnecessary losses.
Here are some common mistakes worth avoiding.
Buying Shares Without Research
Never purchase a stock simply because someone recommended it on social media or in a messaging group.
Understand the company's business and financial position before investing.
Investing All Your Money in One Stock
Putting all your money into one company creates concentration risk.
Diversification across different companies and sectors can help reduce dependence on a single investment.
Following Stock Market Rumours
Unverified tips, fake news, and misleading investment promises can result in poor decisions.
Use reliable sources and conduct your own research.
Panic Selling During Market Corrections
A temporary fall in the market does not automatically mean that you should sell every investment.
Review the reasons behind the decline and check whether the company's fundamentals have changed.
Using Borrowed Money to Buy Shares
Investing with borrowed money can increase financial pressure and magnify losses.
It is generally safer to invest only money that you can afford to keep invested and potentially lose.
Ignoring Brokerage and Taxes
Always calculate your estimated transaction costs and taxes before deciding whether a trade makes financial sense.
Expecting Guaranteed Returns
No stock, broker, or market expert can guarantee that an investment will generate profits.
A realistic approach is essential for long-term success.
Useful Tips for First-Time Stock Market Investors
If you are buying shares for the first time, you do not need to rush.
Start with a simple investment approach and focus on learning rather than chasing quick returns.
Here are some practical suggestions:
Start with a small investment amount.
Learn the basics of fundamental and technical analysis.
Understand the company's business before buying its shares.
Avoid investing based on rumours or unverified tips.
Diversify your investments instead of depending on one company.
Review your portfolio periodically.
Understand your broker's charges and order types.
Maintain an emergency fund outside the stock market.
Avoid excessive trading.
Keep a record of your purchase prices, selling prices, and transaction costs.
You can also use a watchlist to follow selected companies without investing money immediately.
This gives you time to understand how their share prices behave and how market news affects their performance.
Is It Safe to Buy and Sell Shares Online?
Buying and selling shares online through a properly regulated stockbroker is a widely used way to participate in the stock market.
However, online investing still involves financial and cybersecurity risks.
To protect yourself:
Open an account with a SEBI-registered stockbroker.
Download applications only from official sources.
Never share your OTP, password, or account credentials.
Enable two-factor authentication wherever available.
Avoid clicking suspicious investment links.
Never transfer money to personal bank accounts based on investment promises.
Check your transaction alerts and account statements regularly.
Also, remember that a regulated broker does not guarantee investment profits. The value of your shares can increase or decrease depending on market conditions and company performance.
Final Thoughts
Buying and selling shares in the stock market is not as complicated as it may initially seem. With a Demat Account, a Trading Account, and a basic understanding of the process, you can start participating in the stock market online.
The most important thing is to learn before investing.
Understand the company, check its financial performance, choose the right order type, and calculate the charges involved in every transaction. Avoid blindly following tips or expecting to become rich overnight.
If you are a beginner, start small, gain practical experience, and develop a disciplined investment strategy.
Remember, successful investing is not about buying and selling shares every day. It is about making informed financial decisions, managing risk, and staying consistent with your long-term goals.
Disclaimer: This article is for educational and informational purposes only. It does not constitute financial or investment advice. Stock market investments are subject to market risks, including the possibility of losing your invested capital. Always conduct your own research or consult a SEBI-registered investment adviser before making investment decisions.
Frequently Asked Questions (FAQs)
Can I buy shares without a Demat Account?
In India, a Demat Account is generally required to hold listed shares in electronic form. You also need a Trading Account to place ordinary buy and sell orders through a broker.
What is the minimum amount required to buy shares?
There is no universal minimum investment amount. It depends on the share price, quantity purchased, and applicable transaction charges.
Can I sell shares immediately after buying them?
In India, eligible delivery shares may be sold before settlement under applicable exchange and broker rules. However, certain restrictions and transaction conditions may apply.
How do I earn money from shares?
You may earn through capital appreciation when a share's selling price is higher than its purchase price. Some companies also distribute dividends to eligible shareholders. Neither is guaranteed.
Is buying and selling shares suitable for beginners?
Yes, beginners can participate in the stock market after learning the basics. Starting with small amounts, researching companies, and managing risk can help build a more disciplined investing approach.
Disclaimer:
This article is intended for educational and informational purposes only. It does not constitute financial, investment, or trading advice. Stock market investments are subject to market risks, and you may lose some or all of your invested capital. Share prices can fluctuate due to market conditions, company performance, and economic factors. Always conduct your own research and consult a SEBI-registered investment adviser before making investment decisions. BNR Universe does not guarantee any profits or investment returns.
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