Stock Market Basics

The harder part is what nobody tells beginners. Opening the account takes an afternoon. Learning not to trade is the part that takes years, and it is where almost all the money is made or lost.

What is a demat account and why do you need one?

Shares in India exist only in electronic form. A demat account is the record of what you own, held at one of two depositories, NSDL or CDSL. Your broker is a depository participant — an agent between you and the depository. It does not own your shares.

That separation matters. If your broker fails, your holdings sit with the depository, not with the broker. You can verify them yourself in the consolidated account statement the depository sends you, and through the depository’s own app. Do that at least once a year, independently of your broker’s app.

What does it cost to open and hold an account?

Account opening is free almost everywhere. Our page on demat accounts covers what else to check. The recurring costs are the annual maintenance charge on the demat account and the brokerage on each trade. For a long-term investor placing a few trades a year, the AMC matters more than the brokerage.

Figures from broker tariff sheets, as of 15 August 2026. Compare the full list on brokerage charges compared.

Brokerage is only part of the cost. Securities transaction tax, exchange transaction charges, SEBI turnover fees, stamp duty, GST and depository charges apply on top. Those are statutory and identical across brokers, so no broker can undercut another on them.

How does a trade actually settle?

Indian equities settle on a T+1 cycle. You buy today, and the shares are credited to your demat account the next working day. Money moves on the same schedule.

SEBI has also introduced an optional T+0 cycle alongside T+1. It launched as a beta on a small set of scrips in March 2024. In December 2024 SEBI widened it to the top 500 companies by market value. See the SEBI circular. It is optional, so T+1 remains the default.

What should your first trade actually be?

Something boring, and small. A broad index fund or an index ETF, bought for an amount you would not miss. The first trade is there to teach you the mechanics. Order types, the settlement cycle, the contract note, the charges. It is not there to make money.

Place a limit order rather than a market order. A limit order fills only at your price or better. A market order fills at whatever is available, which in a thinly traded stock can be far from the last price you saw. This one habit prevents a whole category of beginner losses.

Then read the contract note the same evening. It itemises every charge on the trade. Most new investors have never opened one, and it is the fastest way to understand what a trade really costs.

What should a beginner avoid in the first year?

Futures and options. They are leveraged, they expire, and SEBI’s own studies of individual traders in the segment make grim reading. The marketing around them is heavy precisely because the economics favour the platform. Leave them alone until you can explain, without looking it up, what happens to an option’s value as it approaches expiry.

Also avoid intraday trading, tips groups, and anything promising a fixed return on equity. And avoid checking the portfolio daily. Frequent checking produces frequent action, and frequent action produces charges and tax.

Learn the tax first instead. Listed equity held over 12 months is long-term, taxed at 12.5% on gains above ₹1,25,000 a year. Held for less, gains are taxed at 20%. Those rates change the maths of selling early. See stock taxation.