Delivery of shares ..!

Delivery of shares..!

Many analysts feel markets will increasingly be driven by sentiment. In this environment, one of the leading indicators that reflect investor sentiment in stocks is that of delivery volumes.

Here's how to use it to your advantage.

1. What is delivery of shares?

Investors take delivery of shares when they buy the shares and do not square them off on the same day .

In delivery trades, the purchased shares are held in the demat account.

For taking delivery of shares, investors have to pay the value of the purchase.

2. How do you interpret the data on delivery volumes?

Delivery volumes are an indication of the type of investor interest in a stock; when delivery in a stock goes up, it is considered investors are more bullish about the stock's prospects and vice-versa.

But, delivery volumes in itself is vague data. It has to be looked at with respect to the traded volumes and the direction of price movement to determine the interest of the investor community in a particular scrip, according to Vineet Patawari, co-founder, Elearn markets.

If delivery volumes are high, it would be high in terms of the percentage of traded volumes.

(3). How can investors use this as an investment tool?

Delivery volumes can be used to gauge sentiment in the short term.

But, this cannot be the main indicator to determine investor interest.If a company has strong prospects, investors should look at delivery volumes as a percentage of traded volumes.

(4). What are the disadvantages of delivery-based trading?

The brokerages for shares purchased on delivery is higher than that for shares traded intra-day.

This is a disadvantage for traders who operate on wafer-thin margins.

Src: ET, Dia Rekhi

Share: