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Today, the media is flooded with news related to the stock market and how investors are pooling the highest ever amount in the stock market. If you think about it, investing in the stock market is not a complex thing to do. You buy stocks of listed companies when the prices are low and look to sell them when they are high, making a profit in between. With numerous IPOs coming every week, it can prove to be an ideal time for you to start investing in the stock market.
However, to start investing, you need a Demat account and the stocks that are held in this account are known as Demat holdings. Let’s understand the significance of a Demat account and the steps to open one to manage your stock holdings.
A Demat account is also known as Dematerialized account. In other words, it converts or dematerializes your physical shares in the electronic format. With a Demat account, you can hold a wide variety of investments such as bonds, equity shares, government securities, mutual funds, and exchange-traded funds.
Similar to a bank account, a Demat account is either credited or debited each time you buy or sell shares of a company. It not only eliminates unnecessary paperwork but also helps streamline the process of share trading. All of the Demat accounts in India are maintained by two organizations, namely National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
Based on your residential status, you can choose the right kind of account for stock trading and investment purposes. There are primarily three types of Demat accounts offered by depository participants.
Opening a Demat account is simple. You can open a Demat account with IIFL that offers highly competitive prices and unique features in just a few steps:
Once the documentation process is completed and the forms are received at HO, the account will be opened within 24 hours.
As specified above, Demat holdings are the shares you buy that are credited to your Demat account. These shares are your ‘holdings,’ and you can sell them anytime or buy more shares.
For example: Suppose you bought 10 shares of XYZ company for Rs 500. Once you have completed the transaction, it takes T+2 (the day of trading plus 2 working days) for the shares to get credited to your Demat account. Meanwhile, the stockbroker, called DP (depository participant), keeps the shares in a pool account to verify them for fund transfer. The shares, until they are in the pool account, are called DP holdings. Once the stockbroker transfers the shares to your Demat account, they are then called Demat holdings.
After T+2 days, your Demat account will reflect the 10 shares of XYZ company, and you can refer to them as your Demat holdings.
As your Demat holdings include all your shares, you can find more information about the trades in your portfolio. You can follow the below steps for reading your Demat holdings:
To read your Demat holdings, you need to visit the same portfolio tab in your Demat account, on the website, or the Mobile Trading App. You can then follow these steps for reading your Demat holdings:
In this way, you can comprehensively start investing in stocks. But before you do, it is wise that your brush up about the basic jargon of equity investing and how you can manage your Demat account. As the equity markets come with numerous profit-making opportunities, you can look to open a Demat account with IIFL and multiply your wealth through strategic equity investments.
Holding in the stock market means the total number of shares of companies you have invested in your Demat account. Since you have not sold them yet and are ‘holding’, they are known as ‘Holdings’.
You can put a portion of your bank account amount on hold, specifically to be used for trading. This process is known as a hold. At the end of the trading session, you can release the unutilized held amount, which you can again use for purposes other than trading.
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