opening a Demat Account in India

Demat Account in India
Demat or Dematerialized account is to store stocks in electronics form. It is just like opening a bank account to store your money. Now nobody is interested to keep shares in physical forms and going for electronic based filing of shares. This has changed the style of operation in main Indian stock markets like BSE Sensex ( Bombay Stock Exchange Sensitive Index) and Nifty (National Stock Exchange of India) and its brokers.

Depository
Depository is responsible for keeping stocks of investors in electronics form. There are two depositories in India, NSDL (National Securities Depository Ltd) and CDSL (Central Depository Services Ltd).
Depository Participants
DPs are agents who connect depository with Investors. It is like a bank branch with which you can open a demat account to buy or sell shares.
How to Open a Demat Account
It is like opening a bank account. You have to approach a depository participants to open an online trading or demat account. Most of the banks are DPs too. 
Documents Required
You will have to submit few documents with the application form to open a demat account. As per latest Govt of India rule PAN (Personal Account Number) card is must for opening a demat account. These are the documents required to open a demat account

1. Photo Copy of PAN Card (Mandatory)

2. Two Passport size photos

3. Address Proof – Ration Card/Passport/Driving License/Voter’s ID Card/BSNL Telephone/LIC Policy

4. Latest Bank Statement and photocopy of Bank Passbook

You have to fill up and submit the demat account opening form with these documents and will have to pay a small account opening fee.
Your Demat Account
After submitting the application your demat account will become after few days. Once it is active you can start buying and selling shares.
Charges and Fees
There will be an annual account maintenance fee and a transaction fee for your demat account and it will vary between DPs. Contact your depository participants branch or refer their documents.

Online Trading in NSE and BSE

Online Trading in NSE and BSE, Buying/Selling Shares and Brokers.

Investing in share market can bring very good returns compared to other kind of investments like bank fixed deposits, bonds, PPF, NSC etc. Selecting the right stock in the right sector at the right time is important for success in equities. Price of the stocks increases according to the growth of the company plus companies will give bonus and dividend at periodic intervals. 
Indian Stock Markets – NSE and BSE .
The Bombay Stock Exchange(BSE) and National Stock Exchange (NSE) are the main stock exchanges in India. Apart from these two there are many regional stock exchanges. Both NSE and BSE are almost equal in daily traded volume. The primary index of BSE called BSE SENSEX comprising 30 stocks. This includes big Indian companies like Reliance Industries, Tata Motors, ONGC, NTPC, TCS, Infosys, Bajaj Auto, Bharti Airtel, ACC, SBI, Wipro, BHEL, ICICI, HDFC etc as per Apr 2007. Similarly NSE has S&P NSE 50 Index (Nifty) comprising major 50 stocks.
Online Trading
Both NSE and BSE have switched over to computerized Online Trading system from open outcry trading system. BSE has BOLT (BSE Online Trading) and NSE has NEAT (National Exchange Automated Trading). With these highly efficient online trading systems efficiency and transparency of BSE and NSE are increased dramatically.
Online Trading Account and Demat Account
After the introduction of the online trading systems it is very easy to do online trading with just a PC and an internet connection. All you need to do is just open a Demat account and a trading account with a depository participant or DP. DP is connecting Depository to investors. Depository is the people who stores shares in electronics form. In India there are two depositories, NSDL and CDSL.
Buying/Selling a Share
Once the account is active you can buy shares from BSE or NSE. For every buy or sell transaction you will have to pay a brokerage to the broker normally ranges between 0.4% to 0.8%. Suppose you buy 100 shares with price 100. So total amount is Rs 10000. For a .5% brokerage firm you will have to pay 0.5% of 10,000 ie Rs50. Same amount you have to pay when you sell it. So totally Rs 100 will be reduced from your total profit.

Apart from this brokerage you will have to pay many other charges like Service tax on the brokerage ie 12.25% for about transaction it is 12.25% of Rs 50 ie 6.125 for buy and another 6.125 for sell. Then there are other charges like Securities Turnover Tax (.125%), Stamp duty, Education cess, minimum buy/sell commission etc. These amount varies from broker to broker.
Online BrokersThere are many online brokerage firms in India like Sharekhan, Geojith Securities, ICICI Direct, HDFC Securities, India Bulls, Investsmart Online, Kotak Street, Motilal Oswal, 5 Paisa etc.

Natonal stock exchange(Nse)

The National Stock Exchange of India Limited was created on the basis of the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions to provide access to investors from all across the country on an equal footing.

In 1992, NSE was incorporated as a tax-paying company unlike other stock exchanges in the country. In April 1993, NSE was recognized as a stock exchange under the Securities Contracts (Regulation) Act, 1956 and it commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment were started in June 2000.

In October 1995, National Stock Exchange became the largest stock exchange in the country. NSE launched S&P CNX Nifty in April 1996. NSE is one of the largest interactive VSAT based stock exchanges in the world. Presently, it supports more than 3000 VSATs. The NSE- network is the largest private wide area network in India and the first extended C- Band VSAT network in the world.

Bse India (BOMBAY STOCK EXCHANGE)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia. Popularly known as BSE it was established as "The Native Share & Stock Brokers Association" in 1875.
It is the first stock exchange in India to obtain permanent recognition in 1956 from the Government of India under the Securities Contracts (Regulation) Act, 1956.

Bombay Stock Exchange played a pivotal role in the development of the Indian capital market and its index, SENSEX, is tracked worldwide. The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives.