How to Buy Shares Online in India?

Last Updated: 18 Aug 2025

There are numerous asset classes in which you can invest; these include real estate, mutual funds and gold. However, it has been shown historically that stock markets give the highest returns. You can consider investing in stocks and securities, which are the best when it comes to capital appreciation and earning maximum returns from the market. When investments are made in stocks, you may get returns up to 16% in the long term. However, before starting in the share market, you must understand the stock market basics..

How To Buy Stocks in India?

In the present digital age, you can purchase shares online with just a few clicks. Here are the steps required to buy shares online:

1. Getting a PAN card

Obtaining a Permanent Account Number (PAN) is the first step towards trading in the stock market. PAN is a 10-digit unique alphanumeric number allotted when you register yourself for the PAN card. A PAN card also acts as valid identity proof. The government uses PAN to assess your tax liability and is a compulsory document while opening your demat account and trading account.

2. Open a Demat Account

Before purchasing shares online, it is mandatory to open a Demat Account. A Demat account is also known as a Dematerialized account in which physical shares held by you are dematerialised or converted in an electronic format.

Once you open an online Demat Account, the broker will provide you with your unique Demat Account number. This account number is important as it is quoted while buying or selling shares. A Demat Account is similar to your bank account, where you have the option to deposit and withdraw money. The number of shares purchased or sold is credited or debited in your account accordingly.

You can open a Demat Account with a Depository Participant (DP). A DP can either be registered with National Securities Depository Limited (NSDL) or Central Securities Depositories Limited (CSDL), or both.

3. Open a Trading Account

The next step is to open a Trading Account. A trading account is used to purchase and sell shares in the stock market. Once you have a Demat Account to hold the shares virtually, you need a Trading Account to complete the buy and sell transaction. While purchasing shares online, you have to quote your unique Trading Account number.

4. Register with a Broker/Brokerage Platform

You cannot purchase shares directly from the stock market, and you have to use the services of a broker. A broker is a financial intermediary, acting as the link between you and the stock market. The Securities and Exchange Board of India (SEBI) is the regulatory body that certifies brokers in India.

5. The need for a Bank Account

Your trading account requires a bank account to link with the Demat account. Only after you provide a bank account can you purchase shares online.

If you want to purchase online shares, you have to make the requisite order through your Demat and Trading Account. The broker will then forward the transaction for settlement in the stock exchange. Once settled, the shares will be transferred to your Demat Account within two working days. Furthermore, the necessary changes, or purchase costs, will be debited from your bank account.

6. Get your Unique Identification Number (UIN)

To create a database of all Market Participants and investors, SEBI has made it compulsory for investors to get a UIN. You can get a UIN through Point of Service (POS) agents appointed by NSDL.

You must, however, note that a UIN is only required when you are trading with a capital of Rs 1 lakh or more.

After understanding the six steps listed above, you are now all set to purchase shares online. Once you place a purchase order, it is matched with a similar sale order in the stock exchange. After settlement, your Demat Account is credited with the number of shares purchased.

Strategies to Buy Shares Online in India

There are five steps available to purchase shares through the online process. Here they are as follows:

Long Term Investing

Consider a buy-and-hold approach and focus on the long-term growth potential of your selected shares. For first-time investors, choose stocks that have given consistent performance.

IPO Investments

For IPO investments, research the company’s fundamentals and growth prospects. This strategy is a good option for investing capital in emerging entities.

Quality Analysis

Analyse the overall financial health and management style of the company you have chosen to invest in. Evaluate factors like earnings growth, debt levels and corporate governance.

Diversification

Diversify your portfolio across different types of stocks, like mid-cap and large-cap. Also, avoid overconcentration in a specific stock or sector.

Risk Management

Use stop loss orders to guard against the downside and protect your capital. Concurrently, develop a ratio of risks to rewards when considering any investments.

Things to Consider while Buying Shares

The stock market is usually a good area to invest in and make wealth over a long time; but it does come with some risks. To make a better decision, you can follow these five key factors:

Company Fundamentals

Evaluate the financial statements of your chosen company, such as its revenue, its profit margin, earnings per share and the amount of debts it has acquired. These metrics can be used to determine its financial health to select the best stock.

Industry Position

Compare and contrast the competitive advantage of the company and its industry position. This will assist in identifying its sustainability in the long term.

Market Conditions

Analyse current market trends, economic indicators and interest rates. These factors influence the overall stock performance.

Risk Appetite

Align your investment with your financial goals and time frame. Moreover, determine the amount you can invest on a regular basis towards long-term investment.

Conclusion

The most important factor before you start trading is opening a Demat and trading account. Therefore, you must always remember to choose a trusted financial partner for trading in shares. IIFL’s Demat and Trading Account provides you with award-winning research on over 500 stocks. Among the few brokers in India to provide Demat services of both NSDL and CDSL, IIFL provides the industry’s best trading platforms along with customised portfolio analysis.

Frequently Asked Questions

1. What are the requirements of buying shares online in India?

You should have a PAN card, a bank account, a demat account and a trading account to commence with investment. These accounts enable holding and trading of shares in a digital form via a stockbroker.

2. Is it safe to buy shares online?

Purchasing shares online with SEBI-registered sites is secure, and all these sites have tutorials in order to get ahead with the investment process. Yet, you should also be sure that your personal data and passwords are secured when you use such platforms.

3. How to buy shares in India with limited capital?

There is no fixed amount, and a nominal threshold is set by brokers. But it is better to get expert assistance to get an understanding of the fundamentals of investments.

4. How to buy stocks online?

Once your trading and demat account become active, log in to your platform and search for your chosen stock. Enter the quantity and price, then submit a buy order during the market hours.

5. What is the difference between trading and a Demat account?

A demat account keeps your shares, while a trading account is used to buy and sell them on stock exchanges. Both of them are required to invest in shares online.