Trading stocks in India is increasingly popular both in India and abroad because its economy ranks seventh in the world in nominal GDP. Foreign investors who want to diversify can allocate capital into emerging markets and India is often one of the top destinations in those emerging markets.
Trading stocks in India can be quite profitable with its two major stock exchanges and a wide selection of member firms, as long as you choose the right broker. Not all brokerages offer the same features, so make sure to carefully consider your needs before you open an account.
Quick Look: Best Stockbrokers in India
- Best Overall: ICICI Direct
- Best for Beginners: Sharekhan
- Best for Day Traders: Zerodha
- Honorable Mention: 5Paisa
- Honorable Mention: Interactive Brokers
Overview of Stock Trading in India
While most stock trading in India takes place on these two major exchanges, other smaller Indian exchanges include the Calcutta Stock Exchange in Kolkata, the India International Exchange, the Magadh Stock Exchange and the Metropolitan Stock Exchange of India.
All stock exchanges in India are overseen by the Securities and Exchange Board of India (SEBI). India’s two principal stock exchanges, the NSE and BSE, both follow the same clearing and settlement process and have the same trading mechanism and trading hours. Most Indian securities are listed on both exchanges which provides liquidity as the exchanges compete for order flow.
The trading mechanism at both exchanges consists of a limit order book. This matches orders through a trading computer without the intervention of human specialists or market-makers. The trading process is purely order-driven, which means that a market order is automatically matched by the best bid or offer on the market.
All orders in the trading system must be entered by registered member brokers that typically provide clients with an online trading platform. Institutional investors can also use a direct market access (DMA) option on terminals provided by brokers to place orders directly into the stock market trading system.
Settlement for equity spot trades takes place two business days from the trade date. This means that if you trade on Tuesday, your trade would settle on Thursday. Trading hours for both exchanges begin at 9:55 a.m. Indian Standard Time (IST) and close at 3:30 p.m. IST. Each exchange serves as a central counterparty with its own clearinghouse and assumes all settlement risk.
India opened its stock market to foreign investment in the 1990s. It also divided foreign investments into two categories: foreign portfolio investment (FPI) and foreign direct investment (FDI). Any investment where the investor participates in the management of the company is an FDI, while investment without any management participation is considered an FPI.
In order to make portfolio investments and trade stock on the Indian stock exchanges, you must first register as a foreign institutional investor (FFI) with the Designated Depository Participants (DDP) office. Registration for FPI is available under the following three categories:
- Government and government-related foreign investors such as central banks, governmental agencies, sovereign wealth funds and international/multilateral organizations and agencies.
- Mutual funds, investment trusts, banks, investment advisors, portfolio managers, university funds and university-related endowments and pension funds.
- All other foreign investors, including endowments, charitable societies, trusts, foundations, corporate entities, family offices and individuals.
In addition to FPIs, India also welcomes non-resident Indians and persons of Indian origin to invest in the Indian stock market.
What to Consider Before You Open an Account
Several elements should be considered before you decide to open an account to trade in India.
Regulation and Exchange Membership
To trade stocks on the NSE or BSE, you must go through a broker registered with the SEBI. Stockbrokers doing business in India must be members of the stock exchange in order to act as intermediaries for traders and investors. SEBI protects investor interests and requires all financial intermediaries doing business on India’s stock exchanges to conform to SEBI’s rules and regulations.
Your potential broker should ideally have a trading platform for you to place stock orders on the NSE and BSE or other exchanges. A trading platform should be easy to use and provide a news feed and trading tools such as charting software.
If you decide on a full-service broker, it should provide market research in addition to other features not available at discount brokerages. A good research department could be invaluable to traders and investors.
Commissions and Fees
If you trade actively, the cost of each transaction eventually adds up. On the other hand, if you trade infrequently, keeping costs down will add to your bottom line. If you prefer to do your own research, you might consider using a discount broker that has lower transaction fees.
A responsive customer service department that answers questions related to your account or any other issue you may have is a big plus for a broker. Most brokers give you access to their customer service department through telephone, email and live chat.
Our Picks for the Best Stock Brokers in India
All but one of the brokers on our list have their home base in India, are fully registered with SEBI and are members of the BSE or the NSE, or both.
Best Overall: ICICI Direct
Currently the largest stockbroker in India, ICICI Direct provides brokerage services to over 200,000 customers. ICICI offers exchange-traded funds (ETFs), currencies, mutual funds, fixed deposits, options and futures. It also offers services such as financial planning, National Pension System Accounts, initial public offerings, general insurance, life insurance and loans.
In addition to the slew of financial products and services, ICICI has extensive educational resources that include videos, webinars and its “Money Manager” magazine. You can also join conference calls with researchers on financial products and stocks.
ICICI offers clients two trading platforms. The first is known as the Trade Sharing Account platform (web-based) and used for trading stocks on the BSE and NSE. You can participate in cash and spot trading, buy today-sell tomorrow trading, margin trading, IPOs and mutual funds. The second platform is called Trade Racer and it provides live streaming quotes, researched calls, an integrated fund transfer system and a single order entry page for stocks and derivatives. It also has technical analysis and charting capabilities.
ICICI offers two types of brokerage plans, its I-Secure Plan that charges a flat brokerage percentage regardless of trade volume and its I-Saver Plan that consists of a variable brokerage charge based on trading volume.
Best for Beginners: Sharekhan
Sharekhan gets first place for beginners and it also ranks as India’s third-largest broker. You can trade equities, futures, options, commodities, mutual funds, bonds and non-convertible debentures (NCDs).
Sharekhan offers different account types such as the Sharekhan Classic Account, First Step Account, Sharekhan Trade Tiger Account as well as portfolio management services. Sharekhan also doesn’t charge a minimum amount to open an account.
The broker’s learning materials ideal for beginners include a Knowledge Center that features sections called Market Simplified, Learn to Trade and Technical Terms Simplified. It also offers the Sharekhan Classroom for Stock Market Basics, Investment for Beginners, Futures and Options Basics and Basics of Currencies.
Sharekhan also offers courses, workshops and educational videos. Its research team actively publishes investment advice, stock tips and other important market information.
Sharekhan offers a web-based platform, a ShareMobile app available for iOS and Android devices and the Sharekhan Trade Tiger, which is its most popular platform for retail investors that features live streaming data and high-speed execution for active traders.
Best for Day Traders: Zerodha
Voted “Retail brokerage of the year” in 2018 by the NSE, Zerodha is India’s premier discount brokerage. The broker features a flat rate of Rs 20 per trade for intraday stock, futures and options, currency and commodity trades on the NSE, BSE and the Multi-Commodity Exchange (MCX). This makes Zerodha the best broker for high volume day traders in India.
In addition to local stocks, Zerodha offers mutual funds directly through its specialized Coin mutual fund platform. You can also trade futures, options and commodities on the MCX, stock index futures and options on the NSE and fixed income securities, including those issued by the Indian government.
Zerodha’s proprietary trading platform is called Kite 3.0. This web-based platform features live streaming data, advanced technical analysis trading software and a customizable interface. The platform also includes extensive historical data for stocks, futures and options contracts. Kite 3.0 has a mobile app version available for iOS and Android devices.
You can also build and integrate your own trading platforms with Zerodha’s HTTP/JSON APIs through Kite Connect. For traders who don’t need all the bells and whistles of a full platform, Zerodha offers its Console software that provides a trading dashboard to view your positions and account status. Other supported platforms include Coin for mutual funds and Coin mobile.
Honorable Mention: 5Paisa
India’s second-largest discount broker, 5Paisa, offers research-driven investment products in addition to stockbroking services on the BSE and NSE. You can also invest in mutual funds and buy health and term life insurance from this broker.
5Paisa’s trading platforms include a web-based Trade Station web platform that features fast and easy trade execution, intuitive design with a single window view and advanced technical analysis and charting capabilities. A desktop version called Trade Station EXE is available and has the same features as the web-based version. You can also get a mobile app for Android and iOS.
Another important service offered by 5Paisa consists of Algo trading. The company already has seven pre-approved automated trading algorithms. It also allows you to write your own algorithm for automated trading.
5Paisa’s commissions are some of the lowest in India at a flat rate of Rs 10 per executed order in stocks, futures, options, currencies and commodities. The broker’s website also includes educational resources such as a learning curriculum, videos, articles and a market glossary.
Honorable Mention: Interactive Brokers
Interactive Brokers (IB) is a major international broker based in the United States. Indian residents can gain access to the National Stock Exchange of India through Interactive Brokers. They even have a physical office in Mumbai.
You can trade in a wide variety of assets listed on over 120 exchanges around the globe through Interactive Brokers’ Integrated Investment Account. You can trade stocks, ETFs, forex, metals, futures, options, funds, bonds and structured products.
Interactive Brokers provides an easy-to-use platform called Client Portal aimed at novice traders as well as a web-based platform known as IBKR WebTrader. It also offers its full-featured Trader Workstation (TWS) platform that features numerous extras for experienced traders.
You can access your account using the broker’s IBKR mobile app available for Android and iOS tablets and smartphones. If you’d like hands-free access, check out the broker’s IBot add-on for the Client Portal, Trader Workstation and IBKR mobile platform.
Interactive Brokers has no account minimum and customer service can be contacted on a 24/6 basis using email, live chat
Start Trading in India Today
Check each broker on our list in greater detail by visiting their websites to find the right one for you. Remember, not all brokers are created equal, so make sure you find one that fits your needs before opening an account.