In India, stocks are traded on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE), and other stock exchanges. To buy or sell stocks on these exchanges, a stockbroker is required to execute trades on behalf of the investors. In exchange for this service, the stockbroker will charge a commission, which is typically a flat fee or a percentage of the value of the transaction.
A stockbroker is an intermediary with the authority to purchase and sell stocks and securities on behalf of investors on a stock exchange. Investors cannot trade on stock exchanges directly. To purchase or sell stocks through exchanges, they need a middleman to facilitate the transaction. This intermediary may be an individual or a company authorized to buy and sell stocks and other securities on their behalf. Such an individual or organization is known as a stockbroker. Stockbrokers are typically affiliated with a brokerage firm, but they can also be self-employed. A commission or fee is charged by a stockbroker for the provision of this service.
Stockbrokers are governed by the Securities and Exchange Board of India Act of 1992, the Securities Contract Regulations Act of 1956, as well as the Securities and Exchange Board of India (Stockbrokers and sub-brokers Regulations) of 1992. Additionally, stockbrokers are subject to other rules, regulations, and bylaws that SEBI may issue from time to time.
The Advantages Of Stock Market Investing
Throughout the years, several investors, both beginner and experienced have made profits by planning and investing in stocks. Here are some of the advantages of investing in the stock market:
- Good returns: Despite some risk, the stock market has the potential to produce long-term returns that are inflation-adjusted. They are therefore a better option than other assets, such as fixed deposits, where the rate of return is not inflation-adjusted. When returns are not inflation-adjusted, it means that the rate of returns cannot keep up with inflation.
- Easy: Buying and selling stocks is no longer a complicated process. With the Kuvera app, trading is just a click away. You can now monitor your stock market investments and trade alongside your full-time jobs as it is no longer a time-consuming mechanism.
- Regulated Framework: The Securities and Exchange Board of India (SEBI) regulates the Indian stock market. SEBI is responsible for regulating stock exchanges, promoting their growth, and protecting investor rights. This means that when investors invest in financial products on the stock market, their interests are well-protected by a regulatory framework established by SEBI, reducing the likelihood of companies’ fraudulent activities.
- Flexibility: Novice investors can start small in the market by purchasing small-cap or mid-cap stocks, or large-cap stocks but in smaller units. Investing in stocks does not require a lump sum payment. Another benefit of investing in stocks is that investors can do so at their own discretion; they are not required to invest a set amount each month.
How To Select A Stockbroker
You can select a stock broker by considering the following factors:
- Expertise In Technology: Any stockbroker with knowledge of technology can give their clients an advantage. A broker with an in-house technology team is better equipped to meet the long-term needs of traders and investors in the form of new platform features and solutions. One should select a brokerage that has a strong track record of offering a stable and dependable platform.
- Transparency: A broker may charge their clients in different ways. Therefore, check that their pricing policies are clear and extensively detailed on their website/portal. This will help to prevent unpleasant surprises in the future, as sometimes brokers impose hidden fees without prior disclosure. Ensure that they have appropriate policies for all aspects of the business.
- Brokerage Fee: A brokerage fee is charged by the stockbroker for each transaction. It is advisable to compare the brokerage fees and other services before selecting a broker. Before choosing a broker, read the fine print and check for any hidden fees.
- Financial Products: One of the major components is the broker’s overall offering. It is wise to select a company that offers a variety of products, such as mutual fund advisory, equities, debt trading, international mutual funds, insurance, and loans, among others. As a result, investors can find everything they need from that specific broker. The key to efficient trading is knowing which stock to buy and when. It requires continuous market monitoring and in-depth research. An experienced stock broker can help you with this.
- Online Trading: Investors must seek out brokers whose online trading interface is user-friendly, quick, and uncomplicated.
Top Stock Broking Platforms
Generally, the term stock broker refers to brokers who are qualified and licensed to invest in the securities market. Typically, they act as intermediaries between buyers and sellers of stocks and charge a fee for their services. Few of them are:
- Alice Blue
Frequently Asked Questions (FAQs)
- How to invest in stock market using Kuvera?
- Visit the official website or click here to download Kuvera share market app.
- Complete the mandatory KYC process and create your account on Kuvera.
- Once the process is completed, you can select the ‘Invest’ option on the homepage.
- You can select ‘Stocks” and can explore the list and choose accordingly.
- Then click on “Buy” and select a broker to proceed further. You will be directed to another page where you can sign in with your login details that are registered with your broker.
- You can choose the “Others” option if your broker is not on the list. In that case, you can place the order on your broker’s website and import the updated Consolidated Account Statement (CAS).