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Know How to Use a Demat Account, How to Buy Shares Using Demat

29 Nov 2023

A Demat account comes with many benefits, which is the main reason for its popularity. Not only does it greatly reduce the paperwork, but also provides added advantages of reduced transaction settlement time, higher cost savings, and investment holding safety. More and more people are opening Demat accounts to invest in securities, mainly traded in the stock market. The statistics of one of the primary depositories, the National Securities Depository Limited (NSDL), do not lie. NSDL reports, as of 31 December 2022, that the number of Demat accounts started (on average) since 1996 is 4,448 per day! Furthermore, the number of corporations, of which around 75% stock has been dematted, stands at 18,096. The active Demat accounts in India amount to some 89 million accounts and more (Demat account tally jumps 63% to 89.7 million in FY22, shows data | Business Standard News (business-standard.com). Most investors realize the ease a Demat account affords, as everyone carries a portable device these days and opening and operating a Demat account online is very simple. Shouldn’t you open a Demat account today? 

How to Use a Demat Account

People who have just started stock trading may find Demat accounts to be complex to use, but as they use it, they will get to know all of their specifics. A Demat account works somewhat like a bank account. The only difference is that instead of passbook entries of money kept in the account, a Demat account has the details of the stocks and securities. Demat accounts are safe, convenient, user-friendly, and there's no risk of theft or loss of certificates. Demat accounts can be opened for different securities held by one Demat account holder, either in a single name or joint name. When you open a Demat account for the first time, you may not have any shares at all and may be yet to invest in the markets. However, you may also open a Demat account if you hold your current securities like stocks and debentures in physical format. The new Demat account that you open lets you convert your physical paper certificates into electronic format so they can be free from wear and tear and loss and are held securely. Each Demat account holder gets an account number unique to that account, much like a holder of a bank account has. 

How do you know how to Operate a Demat Account?

Operating a Demat account is not at all difficult. It can be opened after registration with any brokerage firm. With the help of an internet connection and password provided after the opening of the Demat account, it can be accessed anytime. A Depository Participant (DP), who will act as a depository agent, has to be selected before opening a Demat account. After that a form has to be filled, and documents like identity proof, passport-size photographs, PAN card, address proof etc., have to be submitted. Post that you have to agree to the terms & conditions specified and then a verification process begins.

How To Start Trading With a Demat Account

Once the physical verification concludes, an ID and an account number is provided to the account opener. Using the account number and the ID, the Demat account can be logged into and be used for buying and selling stocks. How to start trading with a Demat account is not a challenge once you have opened a Demat account. A Demat account and a trading account are both connected, and processes are menu-driven and not difficult to execute. 

For any trading, it's mandatory to have a Demat account. Buying and selling shares physically is cumbersome, and very few agents would now be dealing in physical selling. So, to trade shares, a Demat account is crucial. Although commodities, currencies, derivatives etc can be traded without a Demat account as well.

How To Use a Demat Account To Buy Shares

Want to know how to use a Demat account to buy shares? There's an option of share allocation that allows investors to link a Demat account with the trading account, which allows him to see all the Demat holdings. Share allocation process is simple and takes not more than a few minutes. All the shares can be allocated once, and then after every new purchase, the shares can be allocated via the 'Allocate Share' option. Shares need to be allocated as often as the purchase is made. The time duration and the frequency of allocations depends on share purchase.

Earlier, keeping a tab on investments was a difficult process. Demat account has made it simple as all details are now at a single place. There are facilities that allow viewing transactions and balance online. All that's required for it is registration. Post that, you can log in to the account and view all details. By this, the investor gets to know real-time the value of his investments and how much it has appreciated or depreciated. Don’t delay, open a free Demat account and start online trading.


Demat account offers numerous benefits and is the most convenient way to buy and sell shares, stocks and derivatives. If you have always wanted to trade shares but don’t have a Demat account, then open one.


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