How to Purchase and Sell Shares Through a Demat Account?

In earlier times, investors used to fill out elaborate forms and hassle with the crowd to place purchase bids for acquiring shares. The selling of shares also follows a similar procedure. The arrival of the Demat account has replaced the time-consuming process of buying and selling shares. Using a Demat account, investors can trade securities with a few clicks.

This blog guides you on how to purchase and sell shares through Demat account and discusses the benefits of using a Demat account to trade securities.

Why is it Important to use a Demat account?

Just like you need a bank savings account to hold funds you get from salary or other deposits, a Demat account also acts as a repository for your purchased securities. Demat account enables traders to conduct securities transactions from any device, including smartphones and laptops. Using a Demat account also helps you to address security issues and manage all of your investments in your portfolio.

You have to choose a depository participant (DP) or an online broker who acts as a depository agent to open a Demat account. You need to submit crucial documents like PAN, Aadhaar, digital signature and bank details to complete the KYC verification for opening a Demat account.

Advantages of Using a Demat Account for Trading

Before you know how to purchase shares using Demat account, you should also understand the advantages of using a Demat account for trading securities:

Ease of Access

A Demat account helps you to trade securities from anywhere you want. Using an online broker’s platform, you can buy or sell shares from your office, while travelling, or staying at home.

Simplicity

A Demat account also provides hassle-free trading services along with very low trading charges. However, if you open a Demat account with PL Capital Group – Prabhudas Lilladher, you do not have to pay any trading charges.

Quick Settlements

Unlike the physical purchase of securities in earlier times, this process takes only T+2 days for trade settlements.

Loan Availability

A Demat account also provides the advantage of using your holdings as collateral to avail loans.

Important Things to Consider Before Purchasing and Selling Shares Online

Before you buy or sell shares using your Demat account, you must keep the following things in mind:

• You have to pay some associated charges, like annual maintenance charges (AMC) for the maintenance of your Demat account. However, PL capital charges only INR 450 annually as AMC.
• You should regularly check your contract notes with the Demat account statement and find any discrepancies.
• Brokerage charges and taxes may impact your returns from trading securities.
• A Demat account not only helps you buy or sell shares, but also holds instruments like debentures and bonds in a dematerialised form.

How to Purchase and Sell Shares from Your Demat Account?

Have a look at the procedure below to know how to purchase shares through Demat account:

1. To buy shares, you need to open a Demat account if you do not have one. Download the PL Capital application to open a Demat account for free.
2. Do proper research and choose a particular company to purchase its shares.
3. Add the required funds to the trading account from your bank account to purchase shares.
4. After you select the number of shares and check the amount, place the buy order.
5. The purchased shares will be transferred to your Demat account within T+2 days.

On the other hand, follow these steps to sell shares from your Demat account:

1. Log in to your Demat account using your mobile number or client ID.
2. Have a look at the DP charges of your broker before selling the shares.
3. Input the essential transaction details like the number of shares you want to sell, and place the sell order.
4. You will receive the proceeds of the sale in your Demat account wallet, which you can transfer to your linked bank account.

Technical Terms Related to the Demat Account

Now that you know how to purchase shares through Demat account, you should be aware of these important technical terms related to the Demat account:

Stock Split

Stock splits are the splitting of a single stock into multiple stocks. It depends on the stock split ratio provided by the company.

Broker

A broker provides a platform for facilitating the buying and selling of shares of securities by levying brokerage fees.

Volume

A volume is the total number of shares bought or sold in a specific period. High volume indicates active trading, and a low volume means limited interest from investors.

Nomination

Nomination is the procedure through which Demat account holders choose a recipient of their securities in the event of their demise.

Bond

A bond is a security offered by governments and companies, which have lower growth but higher risks.

Final Thoughts

Knowing how to purchase and sell shares through Demat account is crucial for your investment journey. Demat accounts also make your trading work efficiently as they eliminate paper charges and stamp duty charges.

Want to trade securities with minimal effort? Download the PL Capital application today to avail seamless trading services. PL Digi-Trade also allows you to use efficient tools and technologies, and a margin trading facility (MTF) with a network of quick assistance.

Frequently Asked Questions

Can I sell shares without a broker?

Yes, you can sell shares without a broker. For this, you must have opened a Demat account with a DP from Central Depository Services Limited (CDSL) and National Securities Depositories Limited (NSDL).

Is it possible to withdraw money from a Demat account?

Yes, you can withdraw money from your Demat account to your linked bank account. You need to select the option ‘withdraw funds’ in your online broker application to withdraw the gathered funds.

How do beginners buy and sell shares?

A beginner can buy and sell shares by opening a Demat account with the help of a DP or an online broker. You have to select the particular stocks from which you want to buy or sell shares, enter the quantity, and place the buy or sell order.

What is the limitation of using a Demat account?

One of the common limitations of using a Demat account is that you have to pay AMC charges to the broker each year for the maintenance of your account. However, it ensures your investments are safe and secure from online threats.