Things You Need to Know About Share Market and Demat Account

4 shares, 70 points
Share Market

With the emergence of demat account, physical certificates are no longer required for trading. Presently, these financial securities and shares are held in a dematerialised form, i.e., in an electronic format. It is also compulsory to have a demat account for trading in the share market and to have a nominee while applying for one.

To open demat account in India, you need to first get in touch with a registered depository participant (DP). You can get a listing of registered DPs from the National Securities Depository Limited (NSDL) or Central Depositories Securities Limited (CDSL) websites, and download or collect an account opening application from the registered DP’s office or website.

Before you start investing, it is always wise to learn the basics of the stock market and demat accounts to have a precise idea about the financial markets. Read on to know more!

Share Market Awareness

Every investor has defined objectives and time limits by which they need to attain certain goals. For instance, you may plan to buy a car, study abroad, build a home, etc. To accomplish these goals, it is essential to have a precise financial plan. Share markets and financial assets provide high returns and investing at an early age for a long period of time can give you profitable results.

There are two ways by which you can invest in the share market; short-term and long-term. Based on your age, risk appetite, requirements, and dependency, you can select your path and become a trader in the share market. As share market is generally associated with risk, you must tread carefully and always be aware of your options. The different investment instruments in the Indian share market today are mutual funds, equity, SIP (systematic investment plan),

IPO (initial public offering), bonds, debentures, derivatives, currency, etc.

Demat Account Basics

There are numerous registered DPs available in India, and making a choice among these may be difficult. Here are the five basics that can help you make an informed decision!


A demat account incurs certain brokerage fees and charges such as annual maintenance charges (AMC), transaction, and conversion fees. These charges vary from one DP to another, and before you decide to open an account with a registered DP, you must review the fee structure beforehand.

Bank Account

For a seamless transaction, you need to link your demat account with your trading and savings accounts. The savings account is utilised to funds your investments when you plan to buy or sell shares or securities. Several DPs provide 3-in-1 accounts, which enables an investor to have all three types of accounts (trading, demat, and saving) with a single entity, making it convenient for you to trade in the stock market. If you have a zero balance demat account, but if there is no activity in it for an extended period, then your DP will freeze the account and you will have to undergo the KYC procedure again to trade with your demat account.

Customer Support

Ensuring reliable and dependable back-end assistance from your DP is essential. You may encounter certain difficulties while trading, thus, it is imperative to have an experienced team to ensure you easily and quickly overcome these problems. You may read reviews and feedback given by previous customers to ascertain the reliability of a DP’s services.


In the event of your demise, all the investment holdings in the demat account will be automatically transferred to the nominee. Therefore, it is mandatory that you give nomination details at the time of opening the demat account.

Online Access

Most DPs give an option to open a demat account online. Hence, make sure that the online platform is simple to understand. Moreover, it is best not to choose a DP that offers a complicated online platform as it may become difficult for you to invest in the stock market with it.

A trustworthy DP offers valuable insights and real-time updates without the need for agents or broker. Furthermore, features like curating watch lists, an overview of your current holdings, profit or loss on holdings, and history of buy and sell will help you invest smartly in the share market. It will also reduce the possibility of losses. However, you must also conduct your own extensive research on various shares before making an investment decision. As a prudent investor, you owe some responsibilities towards your demat account! So, try to regulate your contract notes every fortnight in your demat account to check for any discrepancies.

When it comes to investment in the stock market, the sooner you start, the better it is! By investing early and having a demat account, you give your capital more time to grow and increase your profit by collecting the dividend or interest earned on it, year after year!


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Nirmalya Ghosh
Nirmalya has done his post graduate in business administration and now working as digital marketing executive in a US based firm. He loves to share the trending news and incidents with his readers. Follow him in Facebook or Twitter.