Module 1   Introduction to Stock MarketsChapter 3

Financial Intermediaries

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3.1 Overview

From the time you access the market – let’s say, to buy a stock till the stocks come and hit your DEMAT account, many corporate entities are actively involved in making this work for you. These entities play their role quietly behind the scene, always complying with the rules laid out by SEBI and ensure an effortless and smooth experience for your transactions in the stock market. These entities are generally referred to as the Financial Intermediaries.

Together, these financial intermediaries, interdependent of one another, create an ecosystem in which the financial markets exist. This chapter will help you get an overview of what these financial intermediaries are and the services they offer.

broker3 3.2 The Stock Broker

The stockbroker is probably one of the most important financial intermediaries that you need to know. A stockbroker is a corporate entity, registered as a trading member with the stock exchange and holds a stockbroking license. They operate under the guidelines prescribed by SEBI.

A stockbroker is your gateway to stock exchanges. First, you need to open something called a ‘Trading Account’ with a broker who meets your requirements. Your requirement could be as simple as the proximity between the broker’s office and your house. Simultaneously, it can be as complicated as identifying a broker who can provide you with a single platform using which you can transact across multiple exchanges across the world. At a later point, we will discuss what these requirements could be and how to choose the right broker.

A trading account lets you carry financial transactions in the market. A trading account is an account with the broker, which lets the investor buy/sell securities.

So assuming you have a trading account – whenever you want to transact in the markets, you need to interact with your broker. There are a few standard ways through which you can interact with your broker.

  1. You can go to the broker’s office and meet the dealer in the broker’s office and tell him what you wish to do. A dealer is an executive at the stock broker’s office who carries out these transactions on your behalf.
  2. You can make a telephone call to your broker, identify yourself with your client code (account code) and place an order for your transaction. The dealer at the other end will execute the order for you and confirm the status of the same while you are still on the call.
  3. Do it yourself – this is perhaps the most popular way of transacting in the markets. The broker gives you access to the market through software called ‘Trading Terminal’. After you log in to the trading terminal, you can view live price quotes from the market and place orders yourself.

The basic services provided by the brokers include…

  1. Give you access to markets and letting you transact
  2. Give you margins for trading – We will discuss this point at a later stage.
  3. Provide support – Dealing support if you have to call and trade. Software support if you have issues with the trading terminal
  4. Issue contract notes for the transactions – A contract note is a written confirmation detailing the transactions you have carried out during the day.
  5. Facilitate the fund transfer between your trading and bank account
  6. Provide you with a back-office login – using which you can see the summary of your account
  7. The broker charges a fee for the services he provides called the ‘brokerage charge’ or just brokerage. The brokerage rates vary, and it’s upto you to find a broker who strikes a balance between the fee he collects versus the services he provides.

broker3 3.3 Depository and Depository Participants

When you buy a property, the only way to identify and claim that you actually own the property is by producing the property papers. Hence it becomes essential to store the property papers in a safe and secure place.

Likewise, when you buy a share (a share represents part ownership in a company) the only way to claim your ownership is by producing your share certificate. A share certificate is nothing but a piece of document entitling you as the owner of the shares in a company.

Before 1996 the share certificate was in paper format; however post 1996, the share certificates were converted to digital form. Converting a paper format share certificate into a digital format share certificate is called “Dematerialization” often abbreviated as DEMAT.

The share certificate in DEMAT format has to be stored digitally. The storage place for the digital share certificate is the ‘DEMAT Account’. A Depository is a financial intermediary which offers the service of the Demat account. A DEMAT account in your name will have all the shares in the electronic format you bought. Think of the DEMAT account as a digital vault for your shares.

As you may have guessed, your broker’s trading account and the DEMAT account from the Depository are interlinked.

For example, if your idea is to buy Infosys shares, then all you need to do is open your trading account, look for Infosys’ prices, and buy it. Once the transaction is complete, the role of your trading account is done. After you buy, the shares of Infosys will automatically come and sit in your DEMAT account.

Likewise, when you wish to sell Infosys shares, all you have to do is open your trading account and sell the stock. This takes care of the transaction part…however in the backend, the shares which are sitting in your DEMAT account will get debited, and the shares move out of your DEMAT account.

At present, only two depositaries are offering you DEMAT account services. They are The National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited. There is virtually no difference between the two, and both of them operate under strict SEBI regulations.

Just like the way you cannot walk into National Stock Exchange’s office to open a trading account, you cannot walk into a Depository to open a DEMAT account. To open a DEMAT account, you need to liaison with a Depository Participant (DP). A DP helps you set up your DEMAT account with a Depository. A DP acts as an agent to the Depository. Needless to say, even the DP is governed by the regulations laid out by the SEBI.

broker3 3.4 Banks

Banks play a very straightforward role in the market ecosystem. They help in facilitating the fund transfer from your bank account to your trading account. You cannot transfer money from a bank account that is not in your name.

You can link multiple bank accounts to your trading through which you can transfer funds and trade. At Zerodha, you can add 1 primary bank account and up to 2 secondary bank accounts. You can use all the bank accounts to add funds, but withdrawals are only processed to the primary bank account. Also, dividend payments, money from buybacks will be sent to the primary bank account. The primary bank account is connected to your trading account and with the Depository and the Registrar and transfer agents (RTA).

At this stage, you must have realized that the three financial intermediaries operate via three different accounts – trading account, DEMAT account and Bank account. All three accounts operate electronically and are interlinked, giving you a very seamless experience.

broker3 3.5 NSCCL and ICCL

NSCCL – National Security Clearing Corporation Ltd and Indian Clearing Corporation are wholly owned subsidiaries of National Stock Exchange and Bombay Stock Exchange.

The job of the clearing corporation is to ensure guaranteed settlement of your trades/transactions. For example, if you were to buy 1 share of Biocon at Rs.446 per share, there must be someone who has sold that 1 share to you at Rs.446. For this transaction, you will be debited Rs.446 from your trading account, and someone must be credited that Rs.446 toward the sale of Biocon. In a typical transaction like this, the clearing corporation’s role is to ensure the following:
a) Identify the buyer and seller and match the debit and credit process
b) Ensure no defaults – The clearing corporation also ensures there are no defaults by either party. For instance, after selling the shares, the seller should not be in a position to back out, thereby defaulting in his transaction.

For all practical purposes, it’s ok not to know much about NSCCL or ICCL simply because, you as a trader or investor would not be interacting with these agencies directly. You need to be aware that certain professional institutions are heavily regulated and work towards a smooth settlement and efficient clearing activity.

The key takeaway from this chapter

  1. The market ecosystem is built by a cluster of financial intermediaries, each offering services unique to the functioning of markets.
  2. A stockbroker is your access to markets, so make sure you choose a broker that matches your requirements, and services well.
  3. A stockbroker provides you with a trading account which is used for all market-related transactions (buying and selling of financial instruments like shares)
  4. A Depository is a corporate entity which holds the shares in electronic form, against your name, in your account. Your account with the depository is called the ‘DEMAT’ account.
  5. There are only two depositories in India – NSDL and CDSL.
  6. To open a DEMAT account with one of the depositaries, you need to liaison with a Depository Participant (DP). A DP functions as an agent to the Depository
  7. A clearing corporation works towards clearing and settling of trades executed by you.


  1. shiv says:

    what is the market capitalization for big, medium and small companies in india

  2. Milan says:

    Mr. Karthik
    I’m very thankful for explaining A to Z concept of market by this platform.
    don’t take it against you, i’m asking just for my awareness that your have salient knowledge of stock market. then why you and all market experts doing jobs ? they can’t get enough money by investing in market.

    • Karthik Rangappa says:

      Valid question Milan – While i cannot talk for others I can share my views. My job is in a sense dependent on markets as I work full time for a stock broking firm. Besides all my savings are also invested in markets via my equity portfolio + MFs + trading.

    • Ravindra says:

      markets experts participating in TV programs, most of the time at the end they say “I don’t have any personal holdings in the companies discussed” . I wonder where they invest their personal money!!!

      • Milan says:

        I think nobody can predict market. all those adviser are long-term inversters only. they work as a adviser, they need to work like other people do their job/business. they diversified their capital as KARTHIK said. they can’t fully depend on market only.
        Yes you are right Ravindra. They said in disclosure “We do not have any personal holding but we might have recommended to our client.”
        and they all are

      • Karthik Rangappa says:

        Always that that with a pinch of salt 🙂

      • selva says:

        Anybody help me trade. I lost 15 lakhs. Is this possible to make money in this market.

        • Karthik Rangappa says:

          Yes, its possible to make money in markets. People have been doing this for years.

          Given that you have lost so much, I’d suggest you stick to buy and hold rather than active trading.

          • Sunny Kishore says:

            Hi, how to buy and hold stock via zerodha,
            I had seen lot of orders like cover order, bracket order, limit order, stop loss order.
            For buy and hold shares via zerodha, which order should we use.

          • Karthik Rangappa says:

            Sunny, you need to use the CNC order type. I’d suggest you call the support desk, my colleagues there would be happy to hand hold you on this.

    • Pritam says:

      Very valid question Milan.
      This teaching is like giving a spade to the person who is ready to dig gold. If you want to earn above debt instruments returns then equity is the key and to enter in stocks you should have basic knowledge, and that knowledge is provided by them

  3. suman says:

    how to know who is my Depository Participant (DP)?
    is that written on “client master copy”, witch is given by the brokers ?

    • Karthik Rangappa says:

      Yes, the DP ID would be mentioned in CMR. Also, which ever has opened your DEMAT account, they would your DP.

      • suman says:

        who are tehe examples of DP?

        • Karthik Rangappa says:

          Zerodha is a DP!

          • thebalaji says:

            HI Karthik,

            Are the DP and stock brokers are same entities ?

          • Karthik Rangappa says:

            They are two different entities. A broker can be a DP. For example Zerodha is both a broker and a DP.

          • anas says:

            since your a DP , what if you electronically produce a demat certificate and show it in the DEMAT account that zerodha has created?
            and the trading account is also under your disposal …

          • Karthik Rangappa says:

            If only life was that simple 🙂

            We are just a financial intermediary. The shares would be sitting in CDSL, you can always login to your CDSL account directly to check for the shares.

  4. M S Mruthyunjaya says:

    1) I have purchased some shares. Should I to give Delivery Instruction slip when I sold them. 2) If I bought some shares today. Can I sell them tomorrow, without giving Delivery Instruction slip.

    • Karthik Rangappa says:

      DIS is required when you have to transfer shares from one DP to another. It is not required when you plan to sell them via a trading terminal. You can sell shares bought today only after 2 days.

      • Vivek says:

        Just to be clear, If I buy shares on Monday I can sell it only on Thursday. Is that right?

        • Karthik Rangappa says:

          Yup, thats right.

          • Sairam says:

            Wednesday itself you will get the shares I guess as it is T+2.

          • Karthik Rangappa says:

            At the close of T+2.

          • SRIKRISHNA S KASHYAP says:

            Why is there “T+2” system? Can it be reduced to “T”? Will there be any reduction in the transaction time?

          • Karthik Rangappa says:

            The settlements happen at the end of the day – there are agencies involved here – exchange, clearing houses, banks, brokers, and depositaries. But yes, hopefully, technology will help in shrinking the timelines.

          • SRIKRISHNA S KASHYAP says:

            So, What if I have a solution to reduce the transaction time? How can I Implement it? Are there any regulations by SEBI regarding the transaction time to be T+2?

      • Kiran Changia says:

        Can you please explain, why would we need to transfer shares from one DP to another? We all have 1 DEMAT account with any one of the DP right? I’m new to this so chances are that I may not have understood the context of DIS.

        • Karthik Rangappa says:

          Can you please give the context in which this transfer is initiated? Maybe I can explain better 🙂

          • Kiran Changia says:

            I was referring to this response of yours
            “DIS is required when you have to transfer shares from one DP to another. It is not required when you plan to sell them via a trading terminal. You can sell shares bought today only after 2 days.”

          • Karthik Rangappa says:

            This is when you want to transfer shares from your DP to another DP held in another person’s name. Maybe I should have clarified that 🙂

  5. M S Mruthyunjaya says:

    If I want to sell my holdings, how can I give delivery instructions to zerodha, Physical form filled & signed and by post or any other method by email.

    • Karthik Rangappa says:

      As I mentioned earlier, you dont need a DIS for selling from holdings. I’d suggest you speak to our support executive for some clarity on this.

  6. Rajat Maurya says:

    As you mentioned, I can sell shares only after 2 days from the date of purchase. Does this rule include arbitrage trading? If this is the case, how do people do intraday trading?

    • Karthik Rangappa says:

      For intraday it does not matter. All you need to do is ensure the positions are squared off by eod.

  7. harsh says:

    let’s say i have a DEMAT account in SBI, then is the sbi depository or dp?

  8. P.K. Sarmah says:

    I can see a DP Id number in CMR. What about my DEMAT account number?

    • Karthik Rangappa says:

      Not sure Sarmah, let me check and get back on this. Thanks.

    • Renish says:

      Your Demat Account number is not the same as your DP ID. Length of DMAT account number for NSDL and CDSL is 16 digits, of which first 8 are DP Id(Which is same for all Zerodha Client) and last 8 digits are Client ID (in Zerodha we are calling it Beneficiary ID). The entire 16 digit DMAT account number of CDSL is numeric. DP Id generally starts with ‘1’. You can see all these things in back office (

  9. prabhakaran says:

    Hi, Recently i have opened a normal zerodha account, but with that i have linked my NRE bank account.
    My question is , suppose i want to withdraw the money from my trading account to bank account, whether i will be deposited to my account or not; because many are telling that in NRE account we cant deposit Indian currency only foreign currency can be deposited and converted to INR. Please clarify this…

    • Karthik Rangappa says:

      I would suggest you write to our support for this!

      • gohan chpk nani says:

        1)bse & nse what is the difference in investing these? can you explain brefily
        2)how we can trade using software “trading terminal” how can get this from broker? and when it will helpful to use this resource
        3) i need small clarification regarding transfering from trading account to bank account ? well one our friend mentioned above that curreny exchange in rupesss so, my doubt is that the is our money transfer direct bank account or any other account and need exchange to indian currency?

        thank you for the response

  10. Siva says:

    Hi Karthik,
    Say if I have a DEMAT account with CDSL already and my DP is XXXX currently where I’ve some stocks. Now if I want to use Zerodha as well, do I necessarily need to open a new DEMAT account? If NO, can the same account be shared between XXXX and Zerodha? Can I sell the shares bought in XXXX through Zerodha?

  11. Chidu says:

    I will ba travelling to UK for 6 months, Can i trade(Intraday/Delivary) from UK using my current Dmat and trading account?, Can all zerodha sites are accessible from UK?

  12. Sivakumar says:

    HI karthik,

    I have a trading account with XYZ, however i wish to open an account with Zerodha. Do i have to inform my previous broker about the cancellation of our contract or can i simply go ahead and open an account with Zerodha?

    • Karthik Rangappa says:

      You can open the account straight away, there is no need to inform your old broker. Once the Zerodha account is set up, you can request for the closure with you old broker.

  13. arvind says:

    so is trading account basically a current bank account alloted to client by the broker ?
    for example if client transfer money from his bank to broker , it goes to current account maintained by broker ?

  14. JooJoo says:

    Please provide Prev and Next buttons at the end of comments section too.
    Comments section is equally informative and vital for learners.

  15. Vishal Oturkar says:

    Dear Sir,
    if i need money from my trading ac what is a process to withdraw ?

  16. PR4174 says:

    Hi, who are custodians? Are they same as brokers or are they different?

    • Karthik Rangappa says:

      Custodian typically handle funds for clients, which can include both institutions and individuals. Custodians cannot be brokers.

  17. HI karthik,

    Since Demat accounts are provided by DP,and we always see Demat account offered by BANKS, i assumed DP are nothing but banks as where we have our normal bank account. if banks are not DP why do they call to offer us demat account and we can see demat account in our netbanking which belongs to a bank>

    • Karthik Rangappa says:

      Banks can also be DPs. In fact anyone can apply for a DP licence and get one, of course one has to meet the stringent criteria set out by Depositories and SEBI to get the licence.

  18. lizajoseph says:

    Just starting this super exciting journey! I’ve wanted to learn something new and decided on stocks. I see it as a positive sign that I landed on your site. You’ve made the information very accessible. I downloaded the PDF and realised I’d miss out on the comments so am back here. The chapters and the responses to questions in comments are all structured well and easily understandable. Even the questions asked are informative. Opening an account with you guys and hoping that this learning experience is going to be both fun and profitable. Thank you.

    • Karthik Rangappa says:

      Good luck, and I hope you have all the success. Please do not forget to post your queries at the end of the chapter, if any.

  19. Ubaidwani says:

    Hi there, I think the key takeaway point #4 needs to be corrected. Shouldn’t it be the “Depository” rather than the depository participant who holds the digital copies of the shares? Thanks.

  20. shrey says:

    How should i open my my trading account without broker?

  21. ron says:

    What is the maintenance charge for demat account and trading account ?
    At the time of trading (buy stock) purpose we need to transfer money from bank to trading account. isn’t it ?
    Any minimum balance need to maintain in trading account ?

  22. Dev says:

    Hello Sir,

    I am completely new to stock market.
    I’ve Read the first module and based upon my understanding to begin with trading …

    1) I need to open a demat account for storing the shares and a trading account for trading them?
    2) If I open an account on zerodha it will provide me with both accounts or I have to apply separately?
    3) Apart from annual maintainance charges and transaction/brokerage fees on trading transactions, is there any charge while moving funds from trading account to be bank account and vice versa?

    Thanks in advance

  23. Kavitha says:

    Hi Karthik,
    How can I apply for an IPO? I was given a link by Zerodha online support which said I need to go via my indian bank account. I called the indian bank customer care for this and I came to know I have to submit an application to the indian bank branch. Want you to clarify if this is the procedure.

  24. vishal singh says:

    I need a little clarification regarding Depositories, DP and Stock Brokers. Please tell me if I am correct in my following assumption. “I goto stock brokers like ICICIdirect or Zerodha. I open a DEMAT account with them. They connect me with the stock markets like NSE AND BSE. The also connect me with Depositories like NSDL by acting itself as a Depository participant(DP). The depositories store my transactions certificates electronically which I made through a broker. Please let me know If I stand faulty as any point of this argument.

    • Karthik Rangappa says:

      This is how it works Vishal. By the way, just to let you know, Zerodha will open your Demat account with CDSL and not NSDL 🙂

    • Supriya says:

      Are the stock brokers and depository participants two diffferent entities ? If so, could you please give some examples of DPs?

      • Karthik Rangappa says:

        Yes, these are two different entities. A stockbroker is a member of the Stock Exchange like BSE and NSE, while a DP is a member of either CDSL or NSDL. Most banks (and large brokers) offer DP services.

  25. P Shunmugaperumal says:

    cpm full form

  26. karn says:

    I read somewhere that NSE stocks are stored in NSDL and BSE stocks are in CDSL . Then how zerodha is providing DEMAT with CDSL only, why not NSDL also.

    • Karthik Rangappa says:

      This is not true Karn. You can demat them across any depository, it does not make any difference.

  27. Sujai says:

    What is the advantage of using CDSL vs NSDL (by Zerodhara)?
    What is the relation between depository and clearing corporation? Do they come under same management?
    Both Depository and Clearing corporation are owned by government,right?

    • Venu Madhav says:

      There’s no distinct advantage that you get as an investor by having an account with CDSL/NSDL primarily because you get serviced by the Depository Participant; Zerodha in this case. NSDL is backed by NSE with other promoters being IDBI, UTI etc. CDSL is promoted by BSE along with SBI and other banks. There’s no relationship between the Depository & Clearing corporations. Just that each of the Exchanges have their own clearing arm – NSCCL being NSE’s clearing corporation while ICCL is BSE’s clearing corporation.

  28. Sujai says:

    Stock Holding Corporation of India is also a Depository Participant, who holds demat accounts with them( general public)? What is their role in the stock trading?

    • Karthik Rangappa says:

      There are only two Depositories in India – CDSL and NSDL. SHCI is a member to one of these depositories – pretty much like how Zerodha is to CDSL.

      • Avi says:

        Hi Karthik,

        When there is no difference and both the CDSL and NSDL are backed by the stock exchanges then what is the point of having two Depositories. Both these can work with NSE and BSE. Both are regulated the same way. Both can give you the same benefits then why two. Why can’t it be just one Depository?

        Moreover, when I open my DEMAT account I am not worried about it because I am either way able to trade in both the exchnages.


        • Venu Madhav says:

          I think the reason there are 2 depositories is to promote competition in the space, otherwise it’d become a monopoly and customers end up losing out. Depositories being in the service sector need to be competitive since it helps drives performance, innovation thereby benefiting consumers resulting in the overall development of the capital markets.

  29. Dear sir IT is said that one who refers a client to zerodha will get commission which is a % of the brokerage earned by zerodha as long as the refered /new client trades with zerodha. Suppose one approaches DIRECTLY zerodha to open a trading a/c what will be the discount in brokerage for the new client?

    • Karthik Rangappa says:

      There are no discounts as such. Check our brokerage charges –

      • Dear sir (1) IT is mentioned that DEMAT charges for the shares sold @ Rs 13.50 per scrip. IS it applicable even when the client sold the shares thro Zerodha? (2) Suppose for intraday 400 shares are bought thro FOUR orders and sold the 400 shares thro FIVE orders will the brokerage be calculated as per turnover or on the basis of number of orders?

      • Dear sir Sorry … one more doubt. IS there charges to receive CONTRACT NOTES of daily trades thro EMAIL?

        • Karthik Rangappa says:


          • MUTHUSELVAM L says:

            in which medium (like email or post) i will get my contract note. is it mandatory? is there any charges for that? Expecting more details about it. Thanks for reply in advance.

          • Karthik Rangappa says:

            You will receive the contract note on the registered email id, no charges for that.

          • Rohan says:

            What is Contract Note I am confused ?
            Please Help

          • Karthik Rangappa says:

            Consider the contract note as an invoice for all the trading activity you’ve done for the day. It will have the details of the price at which you’ve bought/sold and all the applicable charges.

  30. Mohit says:

    Suppose I have purchased stocks for intraday but the stocks fell and I am loosing money but I feel the stock will rise in few days and I want to have them as cash and carry. Is it possible to convert my trade from intraday to delivery using Zerodha kite?

    • Karthik Rangappa says:

      Of course, you can convert the position from intraday to delivery. Goto position, click on the arrow and click on convert position.

  31. Mehul says:

    Hi karthik
    I have got my CMR copy where in it states the status as Active.
    I recvd a call that i need to transfer 5000/- for activating my account.
    Is it necessary to transfer the amount immediately ? Or within particular time frame ?

    • Karthik Rangappa says:

      Mehul, I’m not too familiar with the sales process. However, there is no harm in transferring the funds I guess, its your trading account anyway.

  32. Neo says:

    Can we trade with any exchange market through a single demat and trading account or do we need a seperate account for different exchange markets?

  33. Nishant says:

    I used to earlier have a trading account with IDBI capital. The DP was Vijaya bank and the Demat is with NSDL. If I want to start trading with Zerodha, then what should I do with my existing broker, DP and demat account?

    • Karthik Rangappa says:

      Its best if you have both trading and DEMAT with Zerodha as this will give you a seamless experience while transacting in the markets.

  34. Salil says:

    When do I need to pay income tax for profits made on equities.?

    For example: I have transferred 1000 Rs. from bank account to trading account. Now I bought shares worth rs.1000. In 2 months value became rs.1500 and I sold the shares.
    Now where my money will go. In trading account or Bank account.

    Also, do I need to pay tax on money which is on my trading account?

    • Karthik Rangappa says:

      Taxes are applicable on the profits that you make. Rs.500, in this case. Also, if you hold the shares for more than a month, then the long term capital gains taxes are not applicable.

      • akhil verma says:

        sir with reference to above comment it is one month or one year. further kindly also let me know if we can get statement of short tem profits made through out the year on which tax is payable. can we pay the tax at the time of filling itr and show the income in others

  35. Puneet says:

    How is it possible that every time i want a buy a share there is a seller at the other end. Is it something related to market makers.

  36. Puneet says:

    Thank you very much. I was doing commodity trading with you people. Now was thinking of doing equity as well
    . Can you tell suppose i am buying ABC company shares where i can online check that how much shares have been traded at any particular time in a given day .how much are left .on nse india site there is a parameter called traded (volume )shares .that is the parameter kya . Thanks

    • Karthik Rangappa says:

      Happy to hear that Puneet, I’d suggest you log into Kite and look for the market depth, in your market watch.

  37. Durgesh says:

    Hi Kartik
    excellent work, I have just opened an account with zerodha (trading and demat). I have my saving account attached to trading account, I want to know that it is necessary for me to transfer money from my sbi saving account to zerodha trading account or it can be done automatically (money deleted from my saving account?

  38. Naman says:

    What is the reason (apart from arbitration) some people trade through BSE when the liquidity in NSE is much higher than that in BSE ?

    • Karthik Rangappa says:

      There are only two reasons – liquidity and availability of the stock (in terms of listing). Apart from this – its just loyalty to exchange I guess.

  39. Prashant says:

    Dear Karthik,

    I am new to trading. To be honest I am under tons of debt and increasing ever. To cope with this I decided to learn about everything of trading with basic to advance level. I tried many trading edu sites but i must say zerodha has explained excellently. It gets very clear to a beginner like me. Thank you for this educational articles and your chat support.

    I have 2 queries.
    1. Please show me a roadmap to learn trading (equity and f&o) with advance level of analysis, where i can be make myself expert in it. ( I want to put my everything to clear my debt, just to give you an idea that i have 5k in hand at this moment and my debt is x2000 times of it.)

    2. Intraday or delivery? By which I can make good profit quickly? Please provide advanced lessons for that too.

    3. In this chat forum i learn that, i can but shares today and if i hold it then i can sell it after 2-3days. What if i want to sell shares next morning. I read its as BTST, pls give me info for btst too.

    Thanks for your help and support that you provide here.


    • Karthik Rangappa says:

      Happy learning, Prashant.

      Also, a piece of unsolicited advice, please don’t mind – if you are under the belief that you can trade and repay your debt, then I’m afraid this is not easy. There is a higher probability to lose this money and you slip into a deeper debt trap. Trading is best when you don’t have these external pressures.

      1) Follow the Varsity sequence module and chapter wise, this will help you develop a comprehensive view. Again, recovering 2000x from 5K is not possible – please do not approch markets with these expectations.

      2) Both techniques are good

      3) More on BTST here –

  40. Deepak says:

    I am an NRI. I would like to do trading with Zerodha platform.
    I am confused whether I have to do trading with my NRI account which requires a PIS account where the charges are high or to start a demat account on my mothers name staying in India and do trading from here (outside India) on behalf of her.

  41. santosh patidar says:

    How promoters pledge their share ? and where these shares will be ( In who’s demat account ? ) ? Before pledgeing the shares promoters need approval from share holders ?

    • Karthik Rangappa says:

      They can pledge it with banks, brokers, or any financial entities. No, they do not need approval from shareholders.

  42. santosh patidar says:

    After demerge if someone not sold his shares to company in buyback, then shares will not trade in future, how can he sale it letter ? and all the shares of the promoters will be there in their demat account ? will I get dividenend if share is demerged and I still hold ?

  43. Anil says:

    Hi karthik bro as you said as brokers are for markets (nse and bse). DPS are for NSDL and CSL. I have seen some of the requirements for brokers. What are requirements for Dps? And how a broker can be dp. Just for example Rj sir maintains rare enterprises what is broker and DP here? Thank u in advance

  44. Kushal says:

    Hello Karthik,

    Great work man, I really appreciate your contribution to traders community. I think this is one of the most liked blogs I have ever seen.

    well anyway, I will be in touch soon.

    Take care and keep sharing knowledge.


  45. Mehta says:

    Hi, I want to know how can reading newspapers improves stock market earnings and understanding?

  46. Hardeep says:

    Hi. I wanted to know if there are any special requirements for opening a trading and DEMAT a/c (with zerodha, for example) for a person who is an Indian citizen but is working in the US on a H1-B visa.

    • Karthik Rangappa says:

      Not really as you are still an Indian citizen. If you have an AADHAAR number, then you can open an account with Zerodha instantly – . But please be aware, you will receive a couple of OTP on your registered mobile number, so make sure you are connected on your mobile while opening the account. If you have trouble, feel free to reach out to [email protected].

  47. Darshan says:

    i m new to trading. please tell me how much money is needed to open DP and DEMAT account in zerodha? do tell me what are all the accounts can i open/needed in zerodha, for seamless trading?
    BTW, i have started to read this blog today only… my friend suggested, and i ‘m liking it. and please provide fullforms in separate page or in a corner of the page. f&o?

    • Karthik Rangappa says:

      Welcome to Zerodha, Darshan!

      1) You will need an Eq Trading & DEMAT account – Rs.300
      2) If you plan to trade in Commodity account – Rs.200

      F&O stands for Futures and Options.

  48. Jinal says:


    I had a query.
    What if the person defaults in paying for the shares he bought. As in he buys the share but doesn’t have enough funds in his trading account and either forgets or doesn’t transfer funds from his savings a/c to trading a/c.

    What happens then?
    Who pays the seller of the share- broker, exchange?
    What does the broker do?


  49. ishwar says:

    Hi Karthik,

    I am going thru your articles here and are pretty good to understand the basics.
    As i am new to this world, is there any platform in zerodha family where suggestions to buy a particular stock/share. As i see lots of analysis and technical skills about the market are required to play in. Yeah, its take time to learn, but to help to the beginners on the small investments and not to get demotivated by the losses.


  50. Atul sanap says:

    if the volume of particular stock is around million , will it be easy to buy and sell the share within seconds

  51. YATHISH says:

    Sir i need buy shares for longterm that means permanent holding,, , which option got confused that (mis or cnc)to select.. now i purchsing but it got sold at the end the of day

  52. Ashok says:

    Very well Explained Sir.
    But I’ve got a little confusion about linking multiple bank accounts to my trading account.
    As I use Zerodha & they told me that I can link up to 5 Bank accounts to my trading account but here you are suggesting that only one bank account can be linked at a time.
    Can you please clear this ambiguity.

    • Karthik Rangappa says:

      Yes, you can link upto 3 bank accounts to your trading account, and one out of the three is considered ‘Primary account’. While funds can be transferred from any of the 3 accounts to the trading account, the withdrawal is only to the primary account.

      Also, thanks for pointing this out. I’ll make the necessary correction.

  53. Ankit says:

    Sir….i knw how and where to open demat account….can u plz tell me from where i can open my trading account….like demat account from zerodha n trading account from?????

  54. Dipak Dhotre says:


    I just open trading account in Zerodha. It’s amazing experience to learn and use it for making money.

    I suggest to add more pictorial view in chapters for more easy understanding whenever possible.
    For example – links (by arrow) between different accounts (bank, trading, demat), BSE, SEBI, CSDL, DP, etc.

    • Karthik Rangappa says:

      Dipak, welcome to Zerodha family! I’m happy to note your experience has been great so far.

      Thanks for the suggestion, will keep this in mind 🙂

  55. DINKAR SHARMA says:

    3.4 Banks withdrawals are only processed to the secondary bank account. it is not correct as withdrawals are only processed to primary bank account

    • Karthik Rangappa says:

      Transfer can be from any of the registered bank accounts, but withdrawal is only to the primary account.

      • Senthil Kumar N says:

        Hi Karthik – Even i noticed the same sentence while going through the chapter and questioned myself why withdrawals are only processed to secondary account as per the statement..

        “3.4 Banks withdrawals are only processed to the secondary bank account”

        Request to kindly correct the sentence for the benefit of others who would be new to this world, thank you.

  56. Deva says:

    Hi.. I m totally new to shares and stocks,and most of the terms do not make any sense at all (still learning) . Firstly,Whats the difference between shares and mutual funds. I mean, MFs are also subjected to market risks,then why r they considered safer to stocks?

    • Karthik Rangappa says:

      Deva, I’d suggest you go chapter by chapter in this module and by the end of it, you will have answers to most of the basic questions.

  57. Senthil Kumar N says:

    Hi Karthik – Thank you for doing this topics this is wonderful I regret that I discovered this very late any person who wants to understand stock market can easily read this to know and I must appreciate that you taken in to account everyone and have covered every little details topic from scratch.. 🙂

    I have a personal clarification, My father held some shares of Eicher motors as part of his employment benefits in physical format after he passed away in 1993 my guardian somehow changed it to his name (myself & my sister were minors back then) we recently came to know about it and have issued a legal notice to him however he has now agreed to transfer it back to us but he is persistent that it be transferred to both to myself & my sister name together, how should we go about it ?

    Should we open a joint Demat account like a Joint SB account ? or is there what are the options available. ? Once it gets transferred we also need to De-materialize it so there shouldn’t be any issues later..

    Looking forward to your suggestion. Thanks.

    • Karthik Rangappa says:

      Senthil, I’m glad you liked Varsity 🙂

      Yes, I think the best option here is to open a joint DEMAT account and then De-materialize the shares. Please do decide on which broker you wish to DEMAT this with, if it is with Zerodha, I can help you with this.

      Good luck.

      • Senthil Kumar N says:

        Thanks for your response Karthik, I already have a account with Zerodha can i convert that in to a joint account by including my sisters name ? or should i open a new joint demat account all together…

        • Karthik Rangappa says:

          Senthil, you cannot add another name to make it a joint DEMAT. I’ll email you separately on this.

          • Senthil Kumar N says:

            Thanks for your prompt response Karthik will follow-up with Mr. Venu.

            Small suggestion: If there is a notification to the queries raised it would be really helpful… hope you understand 🙂

          • Karthik Rangappa says:

            Yes, I do Senthil..but the queries run up in great numbers and the notifications can turn into SPAM, hence we disabled it 🙂

  58. Balaji says:

    HI Karthik,

    Thank you for these wonderful work its well structured and well organised.

    I bought some shares with Ashok leyland on 22/06/2018 and as per the details the dividend announcement date is on 18/5/2018 and effective date is on 9/07/2018.

    My query is regarding dividend payment, correct me if I am wrong, anyone who holds the share on or before 09/07/2018 will get the dividend paid in his primary account. Also should I hold the shares until the dividend is paid in my primary account? if not whats the criteria for dividend payment and the dividend payment date as I am not able to find this info in the website. Kindly advise.


    • Karthik Rangappa says:

      Yes, if your name is recorded as a shareholder before the effective date, then you are eligible to receive the dividends. You can hold the shares till the effective date, maybe a few more days extra and then sell the shares. You will still receive the dividend.

  59. Nithin says:

    When we open account with zerodha, Is it a trading account cum demat account?

  60. Avnish Thakkar says:

    As very well explained there are three accounts linked to seamless trading experience. Now in case I have a trading account with Zerodha and an DP open with help of Zerodha. Let’s say I have one more DP “XX” with other trading company, I want to start trading on Zerodha platform with the “XX” account. Is it possible? If yes how do I do it?

    • Karthik Rangappa says:

      Technically yes, you can link and trade. But this will be a very broken experience for you. By the way, going forward, Zerodha will not allow linking of 3rd party DP accounts with Zerodha trading account.

  61. Tauqeer says:

    You are an awesome trainer.

    My 3 questions ..
    1. Why makes a a broker choose nsdl over cdsl and vice versa .I mean who is more competitive nsdl or cdsl ..
    2. If there is no competitive difference to prioritize nsdl over cdsl and vice versa then why there are 2 depositories ..
    3. Can one buy and sell shares say at nse but stores securities in cdsl. Is this possible ?

    Thanks for your time karthik ..

    • Karthik Rangappa says:

      1) Both are equally good. I guess it just boils down to geographical conveniences 🙂
      2) Because monopoly in such systemically important financial activity is not good for he eco system.
      3) Yes, it does not really matter which exchange you buy from and which depository you opt to store the shares in.

  62. Jay says:

    This is awesome basic covering about stock market. I understood lot of thing as a beginner as i started before a week. Still there are few points in little complex language . But great stuffs at a single place to start. And where is second module ? Thanks

  63. Dhinesh says:

    Great lessons. Came to know the difference between demat and trading accounts…

  64. Sarath says:

    Thank you so much for Varsity. I’m a B.Com final year student having interest in the Stock market. What are the courses that I can pursue after B.Com to get jobs in this area. Also I have a question : what if there are no buyers/sellers at the price quoted by us? Will the company buy it back in such a case? Same in the case of MF. What if there are no buyers when we want to encash MF?

    • Karthik Rangappa says:

      Sarath, I think you should try and do a CFA and try and get a job in the asset management industry. MF orders will always go through, you need not worry about this.

  65. Rajesh Bhojannavar says:

    Can there be a situation, a person attempts to Buy a particular Share, But no one is Selling that Share and vice versa.

  66. Anany Gupta says:

    Many many thanks for these notes. They are more helpful than most others.

  67. Ricks says:

    Does brokers earn bank interest on money which clients deposit in their trading accounts .

    • Karthik Rangappa says:

      There is a marginal amount of float that the broker gets, but this can be small amounts. The bulk of the revenue comes from the brokerage income. So you can imagine how much a broker who charges 0.25% or more would make 🙂

  68. ARUN says:

    Good article and tried in best to explain the functionalities

  69. roopinder says:

    hlo sir,
    I am totally new to the market. Would like to thank you for the efforts you have put in and helped us with the study material.
    would soon get in touch with your team.

  70. Drithin says:


    Thanks a ton for putting up such a complex wisdom into simple words for lay humans like us.

    So with Zerodha, one can open a trading account or Demat account or both?


  71. Ashwani Kumar Rai says:

    1. to claim business expenses ,what kind of (proof of various expenses ) are needed to be shown while filing ITR .
    2. for few small expenses which usually don’t contains ((proof of expenses (receipt)) like newspaper etc, is it necessory to provide
    proof of expense.

  72. Rafi says:

    Thank you so much for the very informative articles.

    Although slightly out of context may I ask this query?
    If the bank where the primary bank account does not provide facility for rights issue subscription via ASBA (Application Supported by Blocked Amount) channel, What is the possibility of using the bank account of a relative or a new account of the same account holder with another compatible bank.

  73. Aryan Singhal says:

    Hello, Karthik many things have been not updated in the download pdf option, like in this chapter under bank section you can compare the two things both are different. Please update them

  74. K A Sastry says:

    Main article is well supported with the Q&A thread which reinforce the understanding. I liked it..

  75. sandip says:

    Hi ,Where can i get this my DEMAT Account No and DP No and trading Account Number?

  76. sandip says:

    Thank you So much Karthik 🙂
    I am really enjoying these modules.Great resource to learn equity market.

  77. Rahul Sharma says:

    Do the Bid and Ask quantities are across that broker or through the whole exchange?

  78. Madhavi says:

    This is in reference to your comment “DIS is required when you have to transfer shares from one DP to another. It is not required when you plan to sell them via a trading terminal”.
    1) As per my understanding, there is limited PoA to the broker to transfer shares during the settlement process, the absence of which necessitates a DIS instruction. Have I inferred it right?
    2)Such transferred demat shares lie in the pool a/c of the broker for utmost 24 hours before the settlement process draws to a close. Is this true?
    3)Does this PoA exist over the bank a/c that is linked to the trading account or is there a similar mechanism as DIS for funds outgo each and every time a trade is executed?
    4)What are the checks and balances that are in place to see that the PoA is not misused?

  79. ashish says:

    if someone want to open account in Zerodha without POA is it possible to open?
    What is alternative to POA if you want to buy/sell on yearly basis? (i mean if some want to do passive investment)

  80. Syam says:

    Can you please clear exactly who is trader and who is broker? Zerodha is a trader or a broker?

    • Kulsum Khan says:

      Hi Syam, a Trader is a person that invests in the capital markets, in a simpler way one who buys and sells stocks and securities for his personal benefit. And Broker is an entity that facilitates the buying and selling of the stocks and securities on behalf of its clients. Hence, Zerodha is a Stock Broker – to learn more about us you can visit our website

    • Karthik Rangappa says:

      Zerodha is a broker. You are a trader.

  81. Chaitanya Pathak says:

    Hi Kartik,

    Recently I have opened trading account in zerodha, As you mentioned earlier trading account is just to make financial transaction like buy and sell the shares. In order to hold the shares in your account DEMAT account is required .

    I have simple query on this do i need to open separate DEMAT account apart from trading account to do the trading.
    If yes then guide the process.

  82. Sakshama says:

    Hi Karthik, thanks a lot for the wonderful website. I just want to know
    1. Whether the T+2 settlement is applied to all the CNC orders? If not then how it is decided?
    2. Why it sometimes says, this particular order is not supported MIS take CNC instead?
    3. Why negative position is not supported in CNC orders?

    • Karthik Rangappa says:

      1) Yes, to all orders
      2) You cannot do MIS in few stocks, this msg is to warn you about it
      3) No, to sell in CNC, you need to have the shares in your DEMAT

  83. Ratik garg says:

    make all the videos the chapter. on you tube as I have seen only 2 of them

  84. Ratik garg says:

    Please share all the videos of the chapter on you tube..eagerly waiting to see more of them and their are many friends who wanna see them as well

  85. amar says:

    as i buy shares through a particular dp [eg;zerodha] will he can see the shares which i have bought…or if he can see how come this will be safe that he will not pass such information to others

    • Karthik Rangappa says:

      Yes, the DP will have access. But most of these processes are system driven as the daily transaction volumes run into a few million rows.

  86. shashanka says:

    Good day Karthik, How are u doing?
    1. Only one bank account can be linked to one trading account. Can the same bank accounts be linked with two or more trading accounts with different brokers?
    2. If I have two different trading accounts with different brokers, is the DMAT account common to both the trading accounts or there are two different DMAT accounts?


    • Karthik Rangappa says:

      1) You can link multiple bank accounts and transfer money from these accounts to your trading account, but you can transfer money from your trading account to only 1 designated bank account called the primary bank account. Yes, you can link the same bank account to multiple trading accounts with other brokers.
      2) You can have a common DEMAT, but its a mess. Better to have a two different accounts.

  87. Raghav says:

    It might not be relevant to what great work you guys are doing. I am pretty new to this and learning the trade through this excellent basic guide. However, I have seen that you are not being “Inclusive” and most of the content has only “He” mentioned everywhere. It might be true that most of the brokers are Male (I am guessing and not at all aware about this) but we need to include our better halves as well. Hope you will consider! Thanks in Advance.
    P.S. : I have no intention to point out your mistake or show myself over smart. However, just a suggestion. I am sure you have female customers as well, who will love this gesture.

    • Karthik Rangappa says:

      Thanks, Raghav. I completely understand your point. It is just that when I’m writing, I only think about the subject and ways in which I can convey my thoughts better. I don’t pay too much attention to any other things, but I guess I have to. Thanks for pointing.

  88. Aashiq Ahmed M says:

    What is the difference between Squaring off the trade and shortening the trade,Karthik?

    • Karthik Rangappa says:

      If you travel from home town to a neighbouring city for work and after you complete the work, you square off. Meaning you get back home. Likewise, you initiate a long or short position with a certain desired outcome. After achieving that (or maybe not) you square off by doing the opposite trade. This is called square off. Shorting is to take a sell position first and then buying it back later. The buying it back later is the square off-trade for the short position.

  89. Abhishek says:

    Hi Karthik, does that mean that depository participants and brokers are same? If not, then what’s the difference?

    • Karthik Rangappa says:

      They are two different companies, but yes, the same entity. For example, Zerodha Securities is the DP and Zerodha Broking is the stock broking arm.

  90. aditaya bansal says:

    don’t take it against you, i’m asking just for my awareness that your have salient knowledge of stock market. then why you and all market experts doing jobs ? they can’t get enough money by investing in market.

    • Karthik Rangappa says:

      I’ve never claimed that I’m a good trader. I’ve struggled and I have learnt from my mistakes and I’m still learning. Its just that we are sharing our trading experience and learning to make it easy for others in their learning journey. I’ve had a fair bit of success in Investing, and I intent to continue investing. There is no end point to investing.

      I cant comment on others, Aditya.

  91. Pramod Patil says:

    As mentioned above there are too many intermediants like Depository, DP & clearing corporations, banks etc. My query is
    1. Are we paying them any fee from our pocket or who paid them for doing these all things.
    2. If we paid then how much are the fees to each of them.

  92. sudharshan says:

    Thank you for this platform i was learning lot of things

  93. sudhakar says:

    hello karthik sir,
    i am absolutely beginner in stock market.i started learning about stock market from few days. i watch videos on YouTube at different channel ,but they are very confusing.some you-tubers says apply this strategy and some says other,some says do technical analysis and some says do fundamental analysis.

    my query is as simple as that,can in this platform(varsity) as i read and understand every article step by step ,that help me to understand stock market and boost my confidence?

    • Karthik Rangappa says:

      We have done our best to keep it simple and straightforward, so if you ask me, stick to Varsity and go with the flow 🙂

  94. Pandurang Patil says:

    Whether No of Trading Account and DMAT account is different or same one and where & how can I know what are my numbers

  95. Pandurang Patil says:

    My query is – (1) I wish to know whether trading account – which is used by me to buy & sell shares & my DMAT account – in which shares held by me remain stored till they are sold or transferred – are two separate accounts with two different nos ? (2) Where can I find my trading account no & DMAT account No ?

    • Karthik Rangappa says:

      That’s right. They are two different accounts. Please check the profile section in Kite or Console.

  96. Maha says:

    I have understood the concept.

  97. Chandrashekhar says:

    “A” has 200 shares of RIL in paper format with his brother “B” being the second holder. Now “A” is no more. He has a son as his sole heir. So to whom would the 200 shares go.. to the second holder or the sole heir ?

  98. Rishabh Sinha says:

    Could you please explain what is the relationship between DP and a broker?

    • Karthik Rangappa says:

      DPs hold your stocks, while the broker helps you transact with the stocks. A broker can also hold a DP licence.

  99. Karthik says:

    Hey Karthik!
    Why don’t depositories themselves offer the service of DEMAT Accounts and instead require a DP to be the liaison?
    If I owned a bank with enough space to store your valuables, the bank would offer the service of lockers independently and not rely on a third party to set up and handle the locker operations.

    I just don’t seem to completely understand the necessity of DPs.

  100. Charan CG says:

    who will be the custodian in the above scenario?

  101. Charan CG says:

    with regards to my above question, as per the article, who will be the custodian here?

  102. Charan CG says:

    Custodian with regards to holding of shares, A custodian is a bank or financial institutions that hold financial securities such as stock, bonds etc.

    so Karthik as per your article above, can we call cdsl and nsdl as depository as well as custodian?

    • Karthik Rangappa says:

      Charan, on a regular basis, you’d not need a Custodian to transact in the market. Yes, CDSL/NSDL are depositaries and act as a custodian of your shares. Note, when I say ‘act as a custodian of your shares’, take that in a literal sense. There are financial intermediaries called ‘Custodians’, whose services you will not need unless you particularly opt for it.


    Thanks 👍👍👍

  104. Sahana says:

    Is it compulsory to have a DEMAT account ? can we buy and sell stocks only having a trading account?

  105. Tralukya Hazarika says:


    What is the difference between a trading account and a Demat account?


  106. I prabhakar acharya says:

    Dear Mr. Karthik ji,
    There are many types of orders like cover order, bracket order, limit order, stop loss order.
    Out of ignorance, I have invested in equities for long term holdings with LIMIT ORDER type. Is it going to impact in any way ? May suggest if they can be converted.


  107. Ameya Deshmukh says:

    Are NSCCL and ICCL subsidiaries of the SEBI or are they independent? If independent, why the need arose for them to exist when SEBI could have simply done their job?

    • Karthik Rangappa says:

      These are owned by exchanges. Also, I didn’t understand your 2nd question. SEBI is a regulator and not a financial service provider 🙂

  108. Shikhar Raje says:

    It would be nice if there was an optional section in this module that maps all the intermediaries to the Zerodha Kite sign up process. I am a completely newbie to this whole process (just started working a few years ago) and wanted to learn. I signed up for a Kite account, and provided all the necessary documents. But I can’t map Kite to these entities mentioned here.

    1. Is Kite a Depository Participant? Or a Stockbroker in this case?
    2. Does my trading account lie with Kite, or with Zerodha (the company)?
    3. When I add funds to Kite to buy a share, am I moving the cash from my banking account to, what, a demat account, or a “wallet” of some type?
    4. Where, within Kite, can I view whether I am on NSDL or CSDL, and how can I switch accounts if I want to?

    All these and many more questions! I understand that Varsity is just for general education, and you cannot promote your own product here, but a SEPARATE, optional module at the end of this, would have helped clarify things a lot more!

    • Karthik Rangappa says:

      Shikhare, I understand. Will put up a note on this. Meanwhile, here is a note for you –

      An entity is called a stock broker, if the entity has a membership with a stock exchange. Zerodha is a stockbroker since we are a member of both NSE and BSE (stock exchanges). A stock broker gives you access to trade the market via a trading account. Our trading account (or portal) is called Kite. So Kite is a trading platform offered by Zerodha, the stock broker.

      Zerodha also offers DEMAT account for you to hold your shares, hence we are a depository participant with CDSL. Note only a depository participant can offer your DEMAT accounts.

      When you move funds from your bank, it moves to your trading account. Think of trading account as a wallet to transact in the stock market.

      Login to kite and check the profile section to see your demat details.

  109. Shreya says:

    Is it possible to buy the shares and sell those within minutes on the same day ‽

  110. Rahul says:

    Hi, kartik I am 19 yr can I see trading as a full time career, if yes then how much capital is needed to start..

    • Karthik Rangappa says:

      Rahul, please consider my advice. Don’t look at trading as a full-time career, it is not easy and the odds of failure is quite high. You may as well choose a career path where you have higher odds of success.

  111. Rahul says:

    As we know , in any field to be a master you have give 10000 hr dedicately , does it work for trading and will it be worth it for me (19 yr old).
    I have got mixed answer of this from different mediums still confused, just wanted to know your opinion on this.

    • Karthik Rangappa says:

      Thats right. But please do check my previous reply to your query. You are better off giving this 10000hrs to another field where odds of success is high.

  112. Rahul says:

    Thanks Karthik for your valuable suggestion.

  113. Rahul says:

    I will follow your advice,

  114. Manikandan says:

    Thanks Karthik for the wonderful job. I have a query.
    If I short sell a share by mistake, what would happen? Will it amount to being a financial fraud?

  115. Hetal says:

    Hi Karthik,
    This may be a silly doubt, but – What a depository participant (DP) to a DEMAT Account is like what an accountant is to a bank or what a teacher is to a school. Right?

    • Karthik Rangappa says:

      Hmm, not really. What a DP is to a DEMAT is like what a Bank is to a bank account or what an Insurance company is to your insurance policy. BAsically, DPs offer you a DEMAT account which is used to store the shares digitally.

  116. pritam says:

    how to search market capital

  117. Priyanka says:


  118. Neil says:

    Hello! Thanks for al these insightful blogs. 🙂

    Quick question. Can I use 1 demat account with two trading accounts? I have a Demat/Trading with HDFC. I’m unable to buy Direct MFs via HDFC trading (only regular). I’m thinking of opening a traiding account with zerodha but don’t want the hassle of two different DP accounts.

    So, to summarize, can I have my HDFC Dmat account linked with Zerodha trading account?

  119. swarna says:

    understood the content

  120. sandesh shetty says:

    Hi Karthik,

    I was wondering is there any website where I can find the ratio/Percentage of FIIs, DIIs and Retails investors investment and participation in the Indian market?

    I tried googling but I couldn’t find any reliable website.

    Sandesh Shetty

  121. SENTHILVEL says:

    Is there any foolproof system deployed in NSCCL ICCL? to avoid any false transaction during the clearing process..

  122. Vipin Kumar says:


  123. Prashant says:

    Registrar and transfer agents (RTA)
    Sir what is the role of RTAs????

    • Karthik Rangappa says:

      They are responsible for a lot of your mutual fund allotment process plus the corporate action process.

  124. Kaizad wadia says:

    Hi Karthik , thank you for all the help and explanation , truly awesome !!
    Some questions
    1) Can one DEMAT be shared by 2 or more brokers ? If no please explain ?
    2) Can we transfer share held in 1 DEMAT account to another DEMAT in case we hold more than 1 DEMAT account ? if whats the process like ? and is this Time consuming ?
    3) IF the Broker goes bankrupt , will the shares held in the DEMAT account connected with his trading account be SAFE and can we still access them and sell it through another broker ? how easy is the process?

  125. Shubh says:

    Hello sir
    1. Supposed company publish 1000 shares and all shares sold out then?
    2. How they increase the price of share

    • Karthik Rangappa says:

      1) Then there is no liquidity in the market
      2) Bids and ask goes up, hence price expectation also moves higher.

  126. vinod says:


    Refer section 3.5 above regarding NSCCL and ICCL. Understand these are the only clearing corporation and their job is to ensure settlement. Then how come zerodha is a clearing member? Had read a blog from zerodha which claims that zerodha is a clearing member now and therefore don’t charge CM charges. Enclosing the link of the blog:

  127. Aaryan prajapati says:

    Sir ,
    Can I do trading or investment just by understanding all the chapters in varsity?

    • Karthik Rangappa says:

      You will get a great start for sure, further, it depends on how you progress along in live markets.

  128. vinod says:

    thank u karthik.

  129. Bhanu Dattal says:

    Can You Make videos of this it will be more easy then

  130. Satya Prakash says:

    Everything was fine and easy to understand.

  131. AYUSH says:

    So basically a DP(zerodha) helps us to open a demat account but I can’t right away buy shares unless I have a trading account so whom should I open a trading account with. I mean does zerodha offer that to our a common investor like me who doesn’t want to perform like daily trading activities doesn’t need to open a trading account with a stock broker and if I need to plzz can someone tell me a good stock broker

    • Karthik Rangappa says:

      Ayush, thats right. You need a trading account to buy and sell shares. You can open an account and use it to your preference, no need to actively day trade.

  132. Shahroz Beig says:

    I got the fact that we need to DEMAT Account to store the certificates, Trading Account to do the transactions(buy/sell), and Bank Account to debit/credit the money. Why do we need these 3 accounts? Why can’t everything be merged into a single Bank Account so that we don’t have to worry about all these things and we can straight away do the transactions using Bank Accounts and store the certificate in it only?

    • Karthik Rangappa says:

      Because these are offered by 3 different entities, Shahroz. Also, the three accounts are seamlessly integrated, so it does not make a big difference.

  133. Financial Broker says:

    Great tips. I love reading this article.

  134. Yogeesh Chikkathimmaiha says:

    Hii Karthik, this is by far the best knowledge and content of share market i have come across ,Especially for someone from non financial background this is god sent .Right from the design and language and format everything is put in is just brilliant .Thank you for such great work ,And Zerodha varsity for bringing this knowledge to everyone .

  135. Ketan says:

    Is it possible to order the comments with `Recent First` mode like any other platform does ? It’s not so intuitive to read older comments first. A small change but can make big difference. People will really see that this product is still relevant after a decade (approx) from knowledge standpoint.


  136. Chandrapalan says:

    Like all the explanation & clarification.

  137. prashant s says:

    I have an account on Zerodha. Also on other broker services. I came to know that I can view all the DEMAT account details, trades, holdings etc on CDSL, and NSDL. But do not know the log-in process. Are there any details on this that I can read and understand here on Varsity? Thank you.

  138. Vinayagamoorthy Kuppusamy says:

    Good work. BTW, due to recent SEBI regulations for Mutual funds, we end up needing to know ICCL. May be we could update this page. Thanks.

  139. Vinayaka Prabhu says:

    Hi Team Zerodha.
    1. Why have a Trading account/Wallet? why not DP take money instantly from our Bank account like UPI when performing transactions?
    2. Is there a way to have a look at someone’s DEMAT account? How does everyone know Rakesh Jhunjhunwala’s or other high net worth investors’ stock picks?
    3. Apple company has a 2B$ loan. Why do they want money from common investors then, when they can get a loan? (Getting a loan will be less risky right, Govt can bail them if they lose everything, in the shares market, a company usually have to give above-market returns to maintain its reputation)
    4. . Can a company be listed on Stock Market and have private investors?
    Adding to the above question. When I own a share of a company. I will have voting power, etc (heard this not sure). Then how are large companies like Reliance run by Ambani Families and their children? (Is it legal, even though Ambanis own 51% of RIL?)
    5. Heard there are Class A, B, C shares, etc. What type of shares are traded on Stock Market? How to access other class shares? (Even if there are different class shares, will be valued at the same price for everyone)?
    6. Google and Meta bought Reliance shares last year. It was told that Reliance sold its share to Google at a lower price than what it sold to Meta, How is that possible? (Isnt it against SEBIs rules)
    7. . Recently Elon Musk said he would buy Twitter, It was a public traded company. does that mean, All the investors will be forcibly asked to sell their shares?
    8. My mother purchased a gold bond in Canara bank. These are bonds issued by RBI on behalf of GOI. (where is NSDL, CDSL or Stock exchange involved here)? (Isn’t it against SEBI rules)
    9. Are there any shares reserved for Intraday trading and shares reserved for Long term investing? or is it people playing around with the huge pool of shares.
    11. For investing in MF, We don’t need to have a DEMAT account. Then how does SEBI take care of the investors in MF? It just regulates Fund Manager, is it?

    Thanks for the great explanation.

    • Karthik Rangappa says:

      1) You want to buy a stock, its time critical, and payment fails. What will you do?
      2) Not possible. But when you buy large chunk of shares, it either gets reported by regulation or is self-declared
      3) They would have raised money via equity, which is a cheaper form of fundraising compared to debt
      4) Nope
      5) These are in US, not India.
      6) Not reliance, it was in Jio, a separate private company
      7) Elon operates in a different orbit. That said, no, why will the public be forced to sell, unless its a very compelling open offer 🙂
      8) The gold bonds will still in your mother’s demat account held with either NSDL or CDSL
      9) No, nothing like that
      10) Demat is a means of storage. Its good to have shares and MF units in demat, but not necessary.

      Happy reading!

  140. Vinayaka Prabhu says:

    Thanks a lot for the great explanation.

  141. Dhiraj Chandra says:

    Hi Karthik,
    Thank you so much for providing us the comprehensive text on this subject. but one queries here that
    When I downloaded the pdfs, the content is different as compared to the online texts given here. For example point 3.4 that explains about Banks role. So when can we expect to get the updated pdfs?

    • Karthik Rangappa says:

      The PDF is largely the same. Small difference could be there, request you to overlook that as it wont make any difference to learning.

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