The most popular way to buy shares in India is by opening a trading account with a broker. With the help of a broker, you can place orders for different shares, which get executed as a part of the order matching mechanism of the stock exchange. However, the stock broker forms an important intermediary to route your orders to the stock exchange.
In spite of brokers being such an important part of the trading process in India, there are a few ways to buy shares without broker. The important point to consider for these transactions is that you still need a demat account for some of these options. A demat account is an electronic repository or a record of your investments. Any shares you purchase get credited into your demat account after the transaction is completed. You can open your demat account with a reputed depository participant such as Kotak Securities online without any hassles.
If you’re looking to buy shares without a broker, you can do it by following these few routes:
Initial Public Offer (IPO):
An Initial Public Offer or an IPO is when a company approaches the stock market to get its shares listed for the first time. Different categories of investors can apply to get shares allotted. The company decides the number of shares it is offering and the price at which it is offering these shares. It is possible to apply for an IPO online through your trading account, or it is also possible to manually fill up a form and submit it to the
Direct Stock Purchase Plan (DSPP):
DSPP helps you to purchase shares directly from the company. There is no need to purchase these via a broker. This works out to be cheaper since expensive brokerage charges are avoided in this transaction. These are useful for investors who want to enter the market with small amounts to invest. These are usually done via a third party transfer agent.
Unlisted shares are those from companies that are not listed on a stock exchange. As such, the difficulty in investing in such stocks is finding ready buyers and sellers for the same. If you’re directly in touch with the founders of a company, it is possible to invest directly via private placement. One investment strategy for unlisted shares is to invest in them before they are about to list and profit from listing gains.
The important point to note about these strategies is the exit. You will need a trading account to sell the shares you purchase in an IPO as well as unlisted shares that eventually list on stock exchanges. If you’re looking for brokers who offer low brokerage, or in fact wave off brokerage on intraday trading, you may want to consider a reputed broker like Kotak Securities, who offer free intraday trading option as well.