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How to Buy & Sell Shares in Demat Account?

6 Mins 19 Feb 2021 0 COMMENT
Buy & Sell Shares in Demat Account

Most people know that you can buy and sell shares only if you have a Demat account. What some people do not realize is that you also need a Trading account to trade in the stock market. So let us attempt to clear the confusion between a Demat and a Trading account, and explain the necessity of these accounts for executing a trading process.

What is a Demat Account?

Demat is short for Dematerialization. Some years ago, the stock exchanges stopped trading in paper share certificates. They switched to the digital mode. Today, all shares trade in electronic Demat form. When you buy and sell shares, the transactions are reflected in your Demat account. Your Demat account is a repository for your stocks and other securities. However, to buy and sell stocks, you need a Trading account. In short, to participate in the share market Demat account is not enough, you need a Trading account as well.

Additional Read: Documents required to open a Demat Account

What is a Trading Account?

A stock exchange like the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE) has members, known as stockbrokers, and only they are allowed to trade on it. So what do non-members do? How can they buy and sell shares? Well, they can do it only through a member. The stockbroker charges you a fee to transact in shares on the exchange called brokerage.

Since stock trading takes place electronically on the Internet, anyone with a Trading account can trade on his own using a computer or mobile phone. Stockbroking firms offer Trading accounts to buy and sell stocks. It is the platform through which you buy and sell shares. Brokers also provide Demat accounts. Few Banks offer Trading accounts through their securities trading arms too. So you can open a 3-in-1 account to carry out banking and trading activities and have a Demat account alongside. It is convenient for most investors.

Additional Read: What is Trading Account? A Detailed Explanation

Additional Read: Charges and Eligibility Criteria for opening a Trading Account

The Costs Involved

You may have to pay account-opening charges for both Demat and Trading accounts. Of course, many depository participants and brokers do away with such charges to attract new investors. You also need to pay annual maintenance charges and transaction charges for Demat accounts. In the case of trading accounts, you have to pay brokerage and taxes like securities transaction tax while buying and selling shares. You must take these costs, especially the transaction costs like brokerage, into account while opening Demat and Trading accounts since it will affect the returns that you make.

Demat accounts are not meant for just shares. Nowadays many debt instruments like bonds and debentures are issued in Dematerialized form, so you will need a Demat account to invest in them.

Additional Read: Features and benefits of a Demat Account

How to sell shares from a Demat account?

As Demat is a digital account, the entire process to sell shares from your Demat account is also digital. Firstly, you need to have a Trading account to sell shares that lie in your Demat account. It is the medium to transact a sale of shares from your account.

  • Select the stock that you want to sell from your Trading account.
  • Click the ‘Sell’ option next to the stock and enter the number of shares you want to sell.
  • The said number of shares of the selected stock will be debited from your Demat account.
  • The selling price of each share will be the ongoing market price of that stock then. Additionally, the brokerage will be deducted from the sale proceeds, and the net selling price will be credited to your linked Bank account.

How to Buy And Sell Shares Online Using Demat Account | ICICI Direct

Process of selling/buying shares from your Demat account

The process to buy/sell shares from a Demat account can be summarized into five basic steps:

Open a Trading Account

The first step to selling or buying shares from your Demat account is owning a Trading account. It is a prerequisite to trade on any stock exchange.

Study the Trading Account

Secondly, since this is your only platform to execute a trade, you must familiarize yourself with it. Understand its features, functionalities, and overall interface. Browse through all the trading-essential clicks. In the online trading mode, it all boils down to one click. But remember that a wrong click can cause losses too. So, be careful.

Familiarize yourself with the associated charges

The brokerage charges for intraday trades and equity trades differ. Intraday trading refers to buying and selling of shares on the same day while equity trading refers to selling shares after holding them for some time. These charges may also differ from DP to DP based on the services they offer. For instance, since full-service brokers offer 360-degree trading and investment services, they charge you higher than discount brokers that offer no-frills broking services.

Executing the Transaction

Select the stock that you want to buy/sell. Enter the relevant transaction details such as quantity purchased/sold and place the buy/sell order on the trading platform/trading app. If you are buying, you must ensure having sufficient funds in your linked bank account to honour the transaction. Else, your DP may hold the transfer of shares to your Demat account due to payment issues.


In a selling transaction, the shares get debited from your Demat account. And the sale proceeds are credited to your Bank account. The money gets debited from your Bank account in a purchase transaction and the shares get credited to your Demat account.

Additional Read: Can I trade without a Demat Account?


The prerequisites to trade are having a Demat account, a Trading account, and a Bank account. An intelligent solution for a hassle-free trading experience is to open a 3-in-1 account that includes all these three accounts. However, merely being an account holder is not enough for a profitable trade. Read and research the stocks and the market thoroughly before punching in your orders. If you are a fresher in stock markets, the safe route is to play small initially and then take more significant steps as you get the hang of it. Relying on the investment and trading tips offered by your DP or any other financial market expert may also prove to be profitable. 

Additional Read: 5 things you need to know about a 3-In-1 account

Additional Read: How to Choose Best 3-in-1 Demat & Trading Accounts in India?


   1.  How can I buy and sell shares through a Demat account?

You need to open a Trading account in addition to a Demat account to buy and sell shares in the secondary market. A Trading account is a platform that links your Demat and Bank accounts to execute your purchase or sale transaction. You have to punch in your buy/sell order against the desired stock in the Trading account. If you want to buy shares, ensure your bank account holds the required funds to complete the purchase before punching in the order. Thereafter, there will be an automatic transfer of shares from or to your Demat account depending on whether you have bought or sold shares. A consequent fund transfer will take place to settle the trade.

   2.  How can I sell my shares in the Demat account without a Trading account?

You cannot sell your shares in the Demat account without a Trading account. You need to have a Trading account to buy or sell shares from the stock market as per the SEBI mandates.

   3.  How can I check my shares in the Demat account?

You can check the shares in your Demat account through your Depository Participant, a stockbroker, a financial institute, or a bank. Your Demat account functions like your Bank account. Just like you have to check your bank account statement or passbook to find your bank account holdings, you must check the ‘ Statement of Demat Holdings’ to check your shareholdings and other financial asset holdings in your Demat account. You can view your Demat account statement through the online portal, website, or mobile application of your DP.

If you hold multiple Demat accounts, viewing a statement that gives you a compiled view of all your Demat accounts is a better idea. This can be done by accessing a Consolidated Account Statement (CAS) online from your Central Depository (CSDL or NSDL). CAS is an exhaustive document that will give you a comprehensive view of all your holdings.

If your Central Depository is CSDL, you can access your CAS by logging in at the CSDL website (cdslindia.com). Then click on ‘ Quick Links’ followed by ‘ Login to CAS’ before logging into your account using your PAN and Demat Account Number. Enter the rest of the verification details such as birthdate, OTP, etc. You can then enter the desired timeframe of the statement and download it.

NSDL offers the facility of sending you your CAS through email at a monthly, quarterly, or annual frequency depending on the activity level and transactions that have taken place in your Demat account.

Additional Read: How to check my Demat account balance?

Additional Read: How to protect your Trading account against cybercrime or data breaches?

Disclaimer: The contents herein mentioned are solely for informational purposes and shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.