How to Invest in the Stock Market in India?

What is Stock Market Investing?

Investing in the stock market involves buying financial securities – primarily stocks or bonds – with the goal of making a profit in the medium or long term. These securities are traded on financial markets, where buyers and sellers meet.

Investing in the stock market allows you to become a shareholder in a company (through stocks) or a creditor (through bonds). In return, the investor can receive income (dividends or interest) and hope for a capital gain when reselling the securities. This type of investment is therefore a way to grow one's savings by taking advantage of the development of companies and the economy.

Unlike speculation, which is based on short-term operations that are often riskier, stock market investment is part of a long-term logic. It requires a good understanding of how the markets work, accepting a share of risk and diversifying investments to limit exposure to losses.

What are the different accounts for investing in the stock market in India?

To invest in the stock market, it is essential to open a dedicated account that will hold your financial assets (such as stocks, bonds, ETFs) and facilitate your trading operations. In India, several types of investment accounts are available, each with specific tax implications, contribution rules, and investment goals:

Here’s an updated comparative table, including an "Investor Profile" column to help match the account type to your investment objectives and experience:

Once you have opened your investment account, you must choose a financial intermediary to execute your stock market orders. Here are the main options available in India:

• A registered stockbroker: Suitable for investors who prefer personal interaction and access to advisory services. Popular options include ICICI Direct, HDFC Securities, and Kotak Securities.
• An online discount broker: Perfect for self-directed investors wanting low-cost trading with access to wide markets. Leading platforms include Zerodha, Upstox, and Groww.
• A robo-advisor: Offers automated portfolio management based on your risk profile, often with low minimum investment thresholds (e.g., Scripbox, ET Money).
• A CFD broker (international only): Suitable for experienced traders who wish to speculate on international markets using leverage, often through brokers licensed abroad.

What to Invest in on the Stock Market?

The stock market offers a wide range of financial products allowing you to diversify your portfolio according to your objectives, risk appetite and investment horizon. Here are the main types of assets in which it is possible to invest:

Investing in Stocks

Shares represent a portion of a company's capital. By buying a share, you become a shareholder and can receive dividends (a share of the profits) and hope for a capital gain on resale if the price increases. Shares are investments with high potential returns, but also with high risk, as their value depends on many factors (company results, economic situation, geopolitics, etc.).

Les meilleures actions en Bourse sur lesquelles investir dépendent de vos objectifs et de votre style d’investissement. Ainsi, on n’investira pas sur les mêmes valeurs selon que l’on recherche un rendement régulier ou un gain en capital important.

• For a steady return: We will favour the most stable stocks such as Astrazeneca, Total, or McDonald's.
• For significant capital gains potential: We will favour growth stocks like Tesla, NVidia, Apple, or Airbus.

Our opinion

Stocks are suitable for investors willing to accept market volatility in exchange for the prospect of higher long-term gains. Sectoral and geographic diversification is essential to limit risks.

ETF (trackers)

ETFs (Exchange Traded Funds) are index funds listed on the stock exchange. They replicate the performance of an index (such as the NIFTY 50, S&P 500 or MSCI World) by investing in all the securities that make it up. ETFs are traded like stocks, in real time, and allow for broad diversification at a lower cost.

Our opinion

ETFs are particularly suitable for beginner or intermediate investors wishing to easily gain exposure to a market or sector, without having to choose each stock individually. It is an excellent tool for long-term passive management.

FCP (Mutual Funds)

FCPs are collective investments actively managed by professionals. They pool the savings of multiple investors to create a diversified portfolio, according to a defined strategy (equities, bonds, mixed, thematic, geographic, etc.). Unlike ETFs, their valuation is done once a day, and their fees are generally higher.

Our opinion

Mutual Funds are for investors who prefer to delegate the management of their portfolio to experts. They are well suited to those who wish to benefit from a structured management framework, at the cost of a return often lower than ETFs, due to fees.

Obligations

Bonds are debt securities issued by governments or companies. By purchasing a bond, you lend money to the issuer, who undertakes to repay you at maturity, with the payment of regular interest (coupon). Bonds are generally less risky than stocks, but offer a more moderate return.

Our opinion

Bonds are an essential component of a balanced portfolio, especially for cautious investors or those nearing retirement. They help stabilize overall performance and ensure regular income.

How to invest in the stock market when you are a beginner?

More and more young people are getting into stock market investing today, but there is no age limit to starting in this field. However, as a novice investor, it is necessary to take some precautions before getting started.

• The simplest solution is to entrust the management of your investments to a third party whose profession it is, such as a financial advisor, or to software specifically developed for this purpose, such as a robo-advisor.
• It is also possible to make your own investments in the stock market, but in this case, it is preferable to take the time to train and take an interest in how the markets work before you start investing your money.
• Since an investor does not become profitable overnight, it is also preferable to not invest money in the stock market that you may need to live on or to cope with unforeseen expenses.
• Similarly, it is necessary to put in place a precise investment strategy and ideally over the long term by setting achievable goals and taking risk into account.

When to Invest in the Stock Market?

While it is possible to make investments in the stock market at any time, it is necessary to know how to identify good opportunities before buying stocks. To know if it's the right time to buy one or more stocks on the stock market, you need to ask yourself these simple questions:

• What is the current economic situation? Is there growth, or are we in a period of crisis?
• What level of risk are you willing to take? An investor with a high-risk appetite will frequently find interesting opportunities in the stock markets, while a cautious investor will prefer to wait before investing.
• What is the real value of a stock listed on the Stock Exchange? The intrinsic value of companies listed on the Stock Exchange must be defined to know if it is the right time to acquire the shares.
• When does the company pay its dividends? Finally, if you have opted for a yield strategy with shares that allow you to receive a dividend, you must hold these shares no later than the day before the ex-dividend date.

Why Invest in the Stock Market?

Investing in the stock market offers numerous advantages for growing your wealth, protecting your capital against inflation, and diversifying your income streams. Here are the main reasons to invest in the financial markets:

• Grow your savings in the long term: Historically, stock markets have generated attractive returns over several decades. Regular, long-term investment allows you to benefit from the growth of companies and the economy.
• Protect your capital against inflation: Uninvested savings lose value over time. By aiming for a return higher than inflation, the stock market makes it possible to maintain, or even increase, the purchasing power of your capital.
• Generate passive income: Some stocks distribute regular dividends. Bonds pay coupons, offering a stable income to the investor.
• Diversify your assets: The stock market makes it possible to supplement real estate investments or secure savings products.
• Good diversification reduces exposure to a single type of asset or risk.
• Easily access global markets: With online brokers and ETFs, it is possible to invest in thousands of companies around the world. This makes it possible to position oneself in different sectors, geographical areas and levels of economic development.

Good to know

The Stock Market is a powerful tool for investors ready to adopt a long-term vision. Well managed, a stock portfolio can become a lever for sustainable growth and a pillar of your wealth strategy.

Which broker to choose to invest in the Stock Market in India?

To invest in the stock market, it is essential to go through an approved financial intermediary, called a broker. They transmit your buy and sell orders to the markets. The choice of broker directly influences your investment experience, the fees you will pay, the products available and the tools at your disposal.

Here are the main categories of brokers available in India, with their characteristics:

Expert Opinion:

• An independent investor who wishes to diversify at a lower cost will favour an online broker.
• An active trader will opt for a CFD broker, being aware of the risks.
• A beginner or long-term saver will prefer automated management with a robo-advisor.
• Finally, a cautious profile or someone attached to their bank will use a bank broker, despite higher fees.

How much money do you need to invest in the stock market?

The amount of money needed to invest in the stock market will depend on various factors, especially your personal financial situation. Here are the rules to follow if you want to get started:

• Invest a portion of your savings in the stock market: It's important not to put all of your savings into stock market investments. You should keep some of your savings to use in case of need. Ideally, and if you can, keep 20% of your capital in a secure investment or a classic savings vehicle and invest 80% in the stock market.
• Invest in the stock market with a small budget: It is entirely possible to invest in the stock market with a small budget. It is not necessary to have a large amount of capital to start building a stock portfolio. INR 45,000 to INR 90,000 will be enough to create the basics of it, and you can then reinvest your income from dividends or capital gains to buy new securities.
• Don't put all your eggs in one basket: While the stock market is attractive in terms of returns and investment, it is necessary to properly allocate the money you invest in the stock market by ensuring that your portfolio is diversified. For example, you can invest part of it in stocks, another part in one or more funds, and another part in bonds.

Investing in the Stock Market with a Small Budget: Our Tips

If you are a beginner investor and want to invest small amounts in the stock market, you have two solutions:

• Invest your current savings: this is possible from ₹50,000
• Invest a small amount each month: you can also freely make payments to your stock market investment accounts such as a securities account in India to gradually fund it.

What is the taxation on income from stock market investments in India?

Income generated from stock market investments — such as capital gains, dividends, and interest — is subject to taxation in India. The Indian tax system distinguishes between short-term and long-term gains and applies different tax rates accordingly. Here’s a detailed overview of the applicable rules depending on the type of income and account used:

1. Short-Term Capital Gains (STCG) and Long-Term Capital Gains (LTCG)

In India:

• Short-Term Capital Gains (STCG) (for listed equities and equity-oriented mutual funds held for less than 12 months) are taxed at 15%.
• Long-Term Capital Gains (LTCG) (for holdings longer than 12 months) exceeding INR 1 lakh in a financial year are taxed at 10% without the benefit of indexation.
• Dividends are added to the investor's total income and taxed at the applicable income tax slab rate.
• Interest income from bonds or fixed deposits is taxed at the individual’s income tax slab rate.

Note

Equity investments in a Tax-Free Account like ELSS or within a certain lock-in framework (such as PPF or EPF, though they are less common for direct equity) benefit from different tax treatments.

2. Tax Treatment by Type of Account

3. Treatment of Losses

If you incur a loss:

• Short-term capital losses (STCL) can be offset against both STCG and LTCG.
• Long-term capital losses (LTCL) can only be offset against LTCG.
• Unused losses can be carried forward for up to 8 years, provided they are declared in the income tax return filed within the due date.

4. Special Case: Dividends

• Dividends from Indian companies were previously tax-free for investors, but since FY 2020–21, they are taxable in the hands of investors at their applicable slab rate.
• TDS (Tax Deducted at Source) of 10% is applicable if total dividend income exceeds INR 5,000 from a single company in a financial year.

Example

If you receive INR 10,000 in dividends from a company, INR 1,000 (10%) will be deducted as TDS, and the gross amount will need to be included in your total taxable income while filing the return.

Our 5 Tips for Successful Stock Market Investing

Now that you know the fundamental principles of stock market investing, here are five simple tips to follow to quickly become a profitable investor:

• Set achievable goals: Every investor should set financial goals for their investments. These goals will depend on the purpose of the investment. Is it to prepare for retirement, finance a purchase, or a specific project? A motivating goal will be a driver that allows you to devote yourself to your investment with passion.
• Learn about the stock markets: Good knowledge of the stock markets and how they work is essential if you want to make profitable investments. So take some time each week to learn and educate yourself. There are many online training modules that allow you to learn analysis methods, and you can also consult targeted financial news feeds.
• Favor a long-term investment horizon: Unless you are an expert in the financial markets and want to speculate in the short term to generate maximum profits in a short time, it is wiser to invest with a long investment horizon. Speculation presents many risks that you can avoid with progressive investment.
• Know your risk tolerance: You must define as precisely as possible the level of losses and variability of your capital that you are willing to assume. Remember that the higher the potential return of an asset or market, the higher its level of risk will be. A strong aversion to risk should direct you towards the least risky instruments, such as bonds or certain secured funds. If you have a high tolerance for risk, you can try riskier investments such as stocks or https://hellosafe.fr/investissement/crypto-monnaie/prometteuses>cryptocurrencies.
• Don't let your emotions take over: Finally, investing in the stock market is an activity that can generate all sorts of emotions, such as stress, enthusiasm, or fear. A good investor should not let these feelings lead them to make bad decisions and should always keep their initial strategy in mind and stick to it.

Do you want to invest in the stock market yourself and independently? Join a quality online broker without delay and start placing your orders on the market.

All our guides on stock market investment

P. Laurore

Finance expert

Co-founder of HelloSafe and holder of a Master's degree in finance, Pauline has recognised expertise in personal finance, which she uses to help users better understand and optimise their financial choices. At HelloSafe, Pauline plays a key role in designing clear, educational content on savings, investments and personal finance. Passionate about financial education, Pauline strives, with every piece of content she oversees, to provide reliable, transparent and unbiased information for independent and informed financial management. To this end, she has tested over 100 trading platforms to help internet users make the right choices.