With the increase in number of stock broker, people have a lot of option to choose from, but still it is not easy to choose. You need to be sure of what is that you want. Some pointers to keep in mind before deciding on the brokers are:-
1) Full service or discount broker: The main difference among them is full service broker would charge you brokerage as a percentage of your trade value(for ICICI it lies between .5% – .9%). while discount broker are much cheaper charging you based on the number of trade. Most of the discount brokers charges between Rs 15 to Rs 30 per trade irrespective of the trade volume. So if you are going to trade multiple times a month, go for a discount broker rather than a full service one. To understand there difference better, please have a look at the video below.
2) Online trading vs Offline/Phone trading: Most of the brokers have started to provide online trading services to their customers. Some of them also provide trading on phone or even physically at their location. Decide what would be a good fit for you. If you are comfortable trading online from your laptop/desktop, you will find that most of the major brokers are providing that services. There are some people who prefer to trade on brokers terminal, make sure that you check with your broker if he have a terminal near your place.
3) How often do you trade: Whether you are a trader or investor. Investor is someone who trades few times a year while trader will trade at least few times a month. If you are an investor brokerage generally won’t make a big difference in your returns while if you are a trader, brokerage can mean whether you end up making a profit or loss. By that I mean that brokerage adds up for traders.
4) Will you require advice to trade: Would you need financial adviser to trade or would you be trading on your own? If you need adviser, remember to get some historical data of how good the adviser is and would you be comfortable giving him your money. Full service broker generally will have research desk which will send you a lot of recommendations for trading in stocks. Do remember to check there historical recommendations and if it matches your investment needs. Some of the full service broker will even provide you with the service of Relationship manager which will call you a couple of times a month and telling you about the new investment ideas.
5) Do you have access to internet: One more thing to keep in mind while looking at the broker is whether or not it provides call-n-trade service. Because even if you have a smartphone, there could be a chance that you are not able to access your account due to slow internet speed. Then you should be able to call you broker for closing the trade. Most of the broker provide call-n-trade service but ask what is the extra charge for using that service if any. Also some broker say that the provide this service but when you try to call then, the number is always busy. Make sure that you ask them what is the normal wait time to get call-n-trade service.
6) Internet savvy: Newer generation people are tech savvy and don’t mind to trade completely only. If you are like then, discount brokers would be a good fit and if you are someone who prefers to know the face of the brokers, this list would be of little use to you as I have not included any local brokers here. But if you do use local brokers, I would suggest that at least compare their brokerages with some of the new discount brokers to see how much money you are losing by way of higher brokerage.
7) Trading platform provided: One more important thing to ask is what trading platform is provided by your broker and is there any extra charge for accessing that. Most of the broker will provide NEST trading platform free of cost but then charge a monthly charge for access there charting platform or to get access to real time data from there platform. So it is a good idea to get a better understanding of what is being provided by you broker to start with.
In the last couple of years, with the increase in internet penetration and coming of smartphone in India, I have added some of the major discount brokers also in the top 10 list. They are not the largest but are giving full service brokers a run for their money and increasing their market share every quarter. I would suggest to read there reviews before finalizing your brokers. Times are changing and I think that in next couple of years more and more brokers would move from being a Full service broker to discount brokers. And as far as safety of discount brokers are concerned, most of the brokers have a robust risk management in place and follow stringent SEBI rules.
Best discount brokers in India
1) Zerodha : They are one of the largest and oldest Discount broker in India having more than 50,000 clients. They have a very competitive and a simple brokerage structure (Rs 20 per trade) and good customer service. The account opening process is also very easy and most of the work can be completed online. They are one of the few discount broker who have their own Proprietor trading/charting software caller Pi which allows for writing custom algorithm. The good thing about these discount brokers is you may never have to visit their offices. The forms can be filled online and the application can be shipped to them. This type of discount brokers are new in India and providing tough competition to full service brokers. You can find detailed review about Zerodha review here.
2) RKSV: RKSV is a discount broker operating from Mumbai. They provide very competitive rates of Rs 20 per trade irrespective of the size of the trade, with 5 free trades per month for life. They also have unlimited plan monthly plan for traders who want a unlimited trading plan starting from Rs 1,999 per month. The provide NEST and ODIN platform for trading. They are coming up with new mobile based platform called Upstock and the product look nice. There account opening process is also very easy and most of the work can be completed online. You can find more detail about account opening here.
3) SAS online: They are one of the newer discount Brokers having the most competitive rate of Rs 9 per trade. They even offer an unlimited trading plan starting from Rs 999. They are based out of Bangalore. They do provide NEST and ODIN platform and have a very competitive brokerage rate of Rs 9 per trade irrespective of the volume of the trades. You can find a detailed review of SAS Online review here.
For a latest updated list of discount broker, read top 5 discount brokers in India.
Best Full service brokers in India
1) ICICI Direct: By far the biggest and best know full service stock broker in India. They have decent service and easy to use user interface but there brokerage is really high compared to what other discount brokers are providing. There rates starts from as high as .5% to .2% depending on the value of trades you do with them. There biggest selling point is there seamless integration with your ICICI bank account which makes transfer/withdrawal of funds really easy and quick. Good broker for investor but not for trader. You can find detailed information about ICICI Direct brokerage charges here.
2) ShareKhan : Incorporated in February 2000, Sharekhan is India’s 2nd largest stock broker as per number of customers, providing brokerage services through its online trading website Sharekhan.com and 1950 Share shops which includes branches & Franchises in more than 575 cities across India. They are full service broker and provide various other services like asset management etc. You can find my detailed review for Sharekhan brokerage charges here. As of July 30th , BNP Paribas have purchased ShareKhan for Rs 2,200 crore. We don’t expect major changes due to the buyout.
3) HDFC Security: They are one of the larger broking houses in India and with their bank branches, they have one of the largest network which is only after ICICI. They have a vast network of bank branch in even smaller town. Most of the investor who have a bank account end up opening a trading/Demat account with them. They are good full service brokers providing all major services like research desk, mutual fund investments and portfolio management services. You can find detailed review about HDFC security here.
4) Kotak Securities: They are one more well know name in Financial services and with their bank branches in big cities they are able to cater to clients in big cities. There online service is decent but brokerage is not that competitive. You can find detailed review about Kotak Security here.
5) Reliance Money: They came with a bang but lately have lost a lot of sheen from their name. There have been lots of question about their business practices. You can find detailed review about reliance money here.
6) Motilal Oswal : These are one of the decent broker operating in India. They are also full service brokers providing gamut of financial service to the customer. You can find detailed review about Motilal Oswal here.
7) Karvy : They are one of the oldest broking house operating in India. They are the brokers which your fathers used to use for buying there IPO and MF but there online service are not that great. Lately they are upgrading their online platform and there brokerage is also comparable to other full house brokers.
After reading the list, I hope you will be able to select the right brokers for your needs. Do remember that brokerage is important but should not be the only reason to select the broker. Talk to some of them, get a feel and ask any question you may have from them. Once you are comfortable only then open an account with them.
I understand that some of you would say that this list is missing some of the major Brokers in India but I have tried my level best to common up with this list. If you feel that I have missed someone, do let me know in the comments.
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If you still have some questions about who would be the best broker for you, do put in a comment and I would try to suggest what would be the best fit for you.