How to Invest in the Share Market?

Last Updated: 28 Aug 2025

Buying stakes of a company may sound daunting, but shares are simply small units of ownership. When you purchase them, you join thousands of other investors who believe the business will grow. Over time, these shares can rise in value and distribute profits as dividends, turning your savings into a potential wealth-building engine. Yet, success isn’t about luck; it’s about learning how to invest in share market thoughtfully, sticking to a plan, and letting compounding work its magic.

What is the Share Market?

To understand the share market in the most basic way, think of a busy marketplace. Now, instead of spices or fabrics, traders swap fractions of companies. That’s the share market – a regulated platform where investors meet to buy and sell equity. Every listed firm issues shares that represent proportional ownership; their prices move minute-by-minute as buyers and sellers bargain electronically.

Two major Indian exchanges, the BSE and the NSE, set the stage, but similar venues exist worldwide. Because trades settle through clearing corporations and are overseen by entities like SEBI, participants gain transparency and legal protection. Beyond daily price swings, the market reflects collective expectations about earnings, interest rates, and the broader economy.

Mastering how to invest in stocks online begins with grasping this interplay of information and emotion.

For many, disciplined stock market investment offers a path to long-term goals such as retirement, education, or buying a home.

What Are the 2 Different Types of Market

Now that you have a fair idea of the market, let’s take a look at its different types. They are –

1.Primary Market

The primary market functions much like the opening night. When a company wants fresh capital, it issues new shares via an Initial Public Offering (IPO). Investors apply, money flows directly to the firm, and shares are later listed on an exchange. Navigating how to invest in stock market IPOs demands reading the prospectus, gauging valuation, and understanding lock-in periods. Here, price is fixed or discovered through book-building, and allocations depend on demand.

2.Secondary Market

Once listed, shares migrate to the secondary market, which is the everyday trading arena. Here, ownership changes hands among investors, not the company, and prices fluctuate continuously. Liquidity lets you enter or exit positions in seconds. A clear strategy for investment in share market, whether value, growth, or index tracking, guides buying and selling decisions. Regulators monitor transactions to deter fraud, while brokers offer research and tools that simplify share market investment for retail participants.

Investing in the Primary Share Market

Investments in the primary share market are through an Initial Public Offering (IPO). After a company receives all the applications made for an IPO by investors, the applications are counted, and shares are allotted based on demand and availability. To invest in both primary and secondary markets, you need to have a Demat account that will hold electronic copies of your shares. Additionally, a trading account is also important, which will help in buying and selling shares online.

In rare cases, it is also possible for a trader to apply directly from their bank account. IPO application through net banking is made easy via a process that is known as Application Supported by Blocked Amount (ASBA).

As per the ASBA process, if one applies for shares that are worth ₹1 lakh, instead of being sent to the company, these funds will be blocked in their bank account. Once you receive your allotment of shares, the exact amount will then be debited, with the balance being released. All applications that are sent to IPOs are required to follow this protocol. Once shares are allotted to traders, they are listed on the stock exchange, and you can begin trading them within one week.

Investing in the Secondary Share Market

Secondary share market investing or trading refers to the regular purchase and sale of shares or stocks. There are a few simple steps to follow before you start investing in the secondary share market.

• Step 1: Open a Demat and trading account. This is the starting point to invest in the secondary market. Both of these accounts should be linked to a pre-existing bank account for a seamless transaction.
• Step 2: Selection of shares. Log in to your trading account and choose the shares that you wish to sell or buy. Ensure that you have the requisite amount of funds in your account to purchase those shares.
• Step 3: Select the price point. Decide the price at which you want to buy or sell a share. Wait for the buyer or seller to reciprocate that request.
• Step 4: Complete the transaction. Once the transaction is complete, you receive either shares or money for the stocks that you have respectively purchased or sold.

Ensure that you are mindful of the duration for which you remain invested and the financial goals you wish to achieve through your investments.

How to Invest in the Share Market?

1.Open a Demat & Trading Account

Choose a SEBI-registered broker, complete KYC, and link your bank – your gateway for how to invest in stocks.

2.Define Goals & Risk Appetite

Map timelines: six months, five years, or retirement. Align asset allocation so investing in stock market fits your comfort level with volatility.

3.Research & Build a Watchlist

Screen sectors, read financials, and follow credible analyses. This helps answer the practical “how to invest in stocks online” question.

4.Place Orders Smartly

Use limit orders to control price, consider systematic investment plans (SIPs) for rupee-cost averaging, and avoid impulsive trades.

5.Monitor & Rebalance

Quarterly check-ups keep your stock market investment aligned with goals; trim winners, add to laggards, or diversify as life changes.

6.Stay Informed & Patient

Market cycles test nerves. Stick to fundamentals, let compounding do its job, and remember: the answer to how to invest in share market lies in patience and informed decision-making.

Documents Required for Opening a Demat/Trading Account

To begin investing in the share market, you need to have the following documents:

• PAN Card
• Aadhaar Card
• Name on a cancelled cheque from their active bank account showing IFSC Code, account number,
• Account holder’s name, and signature.
• Documents detailing that the applicant earns a steady income.
• A proof of address that is based on a list of documents that have been accepted by your broker, depository participant, or bank
• Passport-sized photographs of the applicant.

Things to Keep in Mind Before Investing

Although stock trading isn’t as difficult as it seems, it is possible to be swept away by the world of trading without being rewarded by it in the long term.

Diversify Your Portfolio

A diverse portfolio is a healthy portfolio. If a particular asset class dominates your portfolio, it will not offer a steady stream of funds your way when that instrument is going through a low patch. To offset the low periods of one asset class, financial advisors recommend adding alternative asset classes. For instance, equity is often offset with investments in bonds or other debt instruments. This balance in a portfolio can secure one against a period of market crisis.

Understand Your Investor Profile

Your investor profile can reveal the kind of instruments that are best suited to your risk appetite. This allows you to ensure that you are taking on the amount of risk that is best suited to your lifestyle.

Create an Investment Plan

You can avoid potential pitfalls down the line if you have an investment plan that states the amount of revenue you wish to earn from your investments and the time horizon you potentially need to remain invested to earn that amount.

Conclusion

When it comes to investing in the share market with the IIFL Capital Services Share market app, certain key considerations should be kept in mind. These include planning your investments, understanding your risk appetite, and ensuring you go for diversity in your portfolio. If you’re finding it tough to select the right shares or plan your investments and set goals according to your acceptable level of risk, reach out to our expert traders at IIFL and take advantage of our stock recommendation services now!

Frequently Asked Questions

1. Is there a minimum amount required for share market investment?

No fixed minimum is needed. Some brokers allow you to buy even a single share, making share market investment accessible.

2. How are gains from investing in stock market taxed?

Short-term profits (holding ≤12 months) are taxed at slab rates or a flat 15%, while long-term gains enjoy concessional rates, subject to current laws.

3. Can I learn how to invest in stocks without professional help?

Yes – start with books, SEBI’s investor portals, and practice via virtual trading before risking real money.

4. Does diversification reduce risk in investment in the share market?

Absolutely. Spreading funds across sectors, sizes, and even geographies cushions individual stock shocks and stabilises returns.