What Do’s and Don’ts should an investor bear in mind when Investing in the stock markets?

Investing in share market or stock market is very trending now a days. Majority of people wants to invest but many lack in proper knowledge.

Through this article, we are covering the tricks, Do’s and Don’ts an investor should bear in his mind when investing in the stock markets.


If you are new into the stock market investing or if you want to know more on share market how to invest do check our previous article where we have shared step by step process of share market invest. Check it here 

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  • Ensure that the intermediary (broker/sub-broker) has a valid SEBI Registration certificate

  • Enter into an agreement with your broker/sub-broker setting out terms and conditions clearly.
  • Ensure that you give all your details in the ‘Know Your Client’ form.

  • Ensure that you read carefully and understand the contents of the ‘Risk Disclosure Document’ and then acknowledge it.

  •  Insist on a contract note issued by your broker only, for trades done each day

  • Ensure that you receive the contract note from your broker within 24 hours of the transaction
  •  Ensure that the contract note contains details such as the broker’s name, trade time and number, transaction price, brokerage, service tax, securities transaction tax etc. and is signed by the Authorised Signatory of the broker.

  • To cross check genuineness of the transactions, log in to the NSE website (www.nseindia.com) and go to the trade verifi cation facility extended by NSE at www.nseindia.com/content/equities/eq_trdverify.html

  •  Issue account payee cheques/demand drafts in the name of your broker only, as it appears on the contract note/SEBI registration certificate of the broker

  • While delivering shares to your broker to meet your obligations, ensure that the delivery instructions are made only to the designated account of your broker only.
  • Insist on periodical statement of accounts of funds and securities from your broker. Cross check and reconcile your accounts promptly and in case of any discrepancies bring it to the attention of your broker immediately.
  • Please ensure that you receive payments/deliveries from your broker, for the transactions entered by you, within one working day of the payout date
  • Ensure that you do not undertake deals on behalf of others or trade on your own name and then issue cheques from a family members’/ friends’ bank accounts.
  • Similarly, the Demat delivery instruction slip should be from your own Demat account, not from any other family members’/friends’ accounts.
  • Do not sign blank delivery instruction slip(s) while meeting security payin obligation.
  • No intermediary in the market can accept deposit assuring fixed returns. Hence do not give your money as deposit against assurances of returns
  •  ‘Portfolio Management Services’ could be offered only by  intermediaries having specific approval of SEBI for PMS. Hence, do not part your funds to unauthorized persons for Portfolio Management.
  • Delivery Instruction Slip is a very valuable document. Do not leave signed blank delivery instruction slip with anyone. While meeting pay in obligation make sure that correct ID of authorized intermediary is filled in the Delivery Instruction Form
  •  Be cautious while taking funding form authorised intermediaries as these transactions are not covered under Settlement Guarantee mechanisms of the exchange
  • Insist on execution of all orders under unique client code allotted to you. Do not accept trades executed under some other client code to your account.
  • When you are authorising someone through ‘Power of Attorney’ for operation of your DP account, make sure that:
  1.  your authorization is in favour of registered intermediary only.
  2. authorisation is only for limited purpose of debits and credits arising out of valid transactions executed through that intermediary only.
  3. you verify DP statement periodically say every month/ fortnight to ensure that no unauthorised transactions have taken place in your account.
  4. authorization given by you has been properly used for the purpose for which authorization has been given.
  5. in case you find wrong entries please report in writing to the authorized intermediary
  • Don’t accept unsigned/duplicate contract note
  • Don’t accept contract note signed by any unauthorised person
  •  Don’t delay payment/deliveries of securities to broker
  • In the event of any discrepancies/disputes, please bring them to the notice of the broker immediately in writing (acknowledged by the broker) and ensure their prompt rectification
  •  In case of sub-broker disputes, inform the main broker in writing about the dispute at the earliest and in any case not later than 6 months.
  • If your broker/sub-broker does not resolve your complaints within a reasonable period (say within 15 days), please bring it to the attention of the ‘Investor Grievances Cell’ of the NSE.
  • While lodging a complaint with the ‘Investor Grievances Cell’ of the NSE, it is very important that you submit copies of all relevant documents like contract notes, proof of payments delivery of shares etc along with the complaint. Remember, in the absence of sufficient documents, resolution complaints becomes difficult.
  • Familiarize yourself with the rules, regulations and circulars issued by stock exchanges/SEBI before carrying out any transaction.





Now, we believe you must have got some clear idea about share market investment and how to do share market investment.