What is Delivery in Stock Market? | Meaning & Key Insights
In the stock market, the delivery trading is buying the shares and keeping them in your demat account rather than selling them on the same day. It is one of the most popular ways of investing, through which traders and investors are able to accumulate wealth over the years.
This guide explains delivery meaning in stock market, how it works, its advantages, and key considerations for investors.
In India, the most popular form of trading is considered to be delivery trading, in which investors purchase the stocks without paying the full price and hold it in Demat account for a longer period. Unlike day traders who buy and sell on the same day, the delivery traders work towards long-term growth and stability. It is a safer and reliable process, especially with a keen plan and risk management. Although delivery trading has numerous advantages, including possible returns and dividends, it also has some charges that investors ought to know before they make the first step.
Delivery trading is essentially the old-fashioned way of investing in the stock market and you purchase shares and that you are going to hold for more than one day, or for the long term, in order to make money or receive dividends. It involves real transfer of ownership, with the shares kept in demat account of the person. As compared to intraday trading you don’t have to sell the shares on the same day. By doing so, you get to remain invested for as long as you would want to, which makes this a good choice among long-term investors.
How Delivery Trading Works?
- uying Shares: Investors get to buy stocks using their brokerage account.
- Holding in Demat Account: Securities hit the demat account of the investor in T+2 days (Trade Day + 2 days).
- Selling Later: Investors are at liberty to sell these shares at any point in the future under the market conditions and goals of investments.
Delivery trading is different from intraday trading, where you need to purchase and sell stocks in the same trading session without having ownership.
What is delivery in stock market means buying financial instruments usually shares with a view of achieving full ownership. Making a buy order on a stockbroker, it will meet a counterpart sell order in the market. As soon as the trade is executed, the settlement process commences. you pay, the seller affects the deliveries of the shares and subsequently are credited to your Demat account. This process, therefore, makes you the legal owner of the shares such that you have the freedom to hold them for as long as you want. It is a popular strategy for investors wanting to create a sustainable source of wealth by virtue of capital gains, dividends acquisition, and diversification of portfolio.
Delivery Meaning in Stock Market
- Delivery trading in stock market refers to purchasing stocks and holding them in your demat account after trading hours.
- Unlike the intraday scheme where investors buy and sell stocks over the same day, delivery meaning in stock market allows investors to hold onto the stocks for days, months or years.
- After receiving the stocks to your account, you have full rights to sell off as you please.
Merits of Delivery trading in stock market
- Long Term Wealth Creation – Ideal for investors who want to invest for a long time in quest to benefit from stock appreciation.
- Reduced Risk when Compared to Intraday Trading – Investors are not under duress to sell stock within a day thereby reducing risk.
- Eligible for Dividends & Bonuses
Important Considerations for Delivery Trading
- Brokerage Charges: Delivery trades tend to command higher brokerage fees compared to intraday trades.
- Capital Requirements: In the presence of no margin trading, investors need to deposit the upfront amount for the shares traded.
- Stock Selection: Averting to fundamentally strong shares and a better long term prospect for the same.
Delivery Trading Example
Ravi, an aspiring investor, decides to start delivery trading in the stock market.
He identifies XYZ Ltd., a promising technology company, as a good long-term investment.
Ravi buys 100 shares of XYZ Ltd. at a market price of Rs. 500 per share.
His buy order is processed, and the shares are credited to his Demat account.
The trade follows a T+1 settlement cycle, meaning shares are received the next trading day.
Over the next two years, XYZ Ltd. grows significantly due to product success and rising demand.
The share price increases from Rs. 500 to Rs. 750 per share.
Ravi decides to sell his shares to book profits.
A sell order is placed, and the shares are debited from his Demat account.
On the next day (T+1), Ravi receives the proceeds from the sale in his trading account.
This entire process is a classic example of delivery trading, where Ravi bought, held, and later sold shares to earn profit.
Ravi’s long-term approach helped him realize significant gains from the stock’s appreciation.
What are the benefits of delivery trading?
Ownership and control: With delivery in stock market, you are able to exercise total control of your shares. You are the one to decide when to sell and how much to sell according to your investment strategy. Long-term wealth creation: Long-term share purchase allows you to profit from the company developing in the future and the value of shares going up. Reduced risk exposure: Unlike in intraday trading, the delivery trade is a bit less risky because there is no pressure to sell on the same day. Additional income opportunities: As a shareholder you are entitled to dividend and you may also receive stock bonuses which can help you to supplement your income whilst holding the shares.
Delivery trading fees and minimum margin
The cost of delivery trading may vary, depending on the stockbroker that you hire. Some of the common charges are listed below: Brokerage fees: this is an amount charged by your broker either on a per-order basis or on a percentage on the value of your trade. Securities Transaction Tax (STT): A tax placed on all stock exchange transactions by the government. Exchange transaction charges: Imposed by stock exchanges like NSE or BSE for carrying out transactions. SEBI turnover fees: A nominal commission of 0.00010% to the Securities and Exchange Board of India on the overall turnover of the trades. Margin trade funding: If you decide to purchase shares at the expense of borrowed funds from your broker, you need to make a margin amount. The balance is covered by the broker who charges an interest on the money borrowed.
Delivery Trading Rules In The Indian Stock Market
Delivery in stock market is subject to certain rules and regulations: •T+1 settlement: In India, the settlement cycle for delivery trading is typically T+1, which means that when you buy shares, you must make the payment within two trading days from the date of purchase. Demat account: delivery meaning in stock market, investors are required to have a Demat account, which can be opened with any broker like Bajaj Financial Securities Limited (BFSL). This account holds the electronic records of their investments. Minimum holding period for tax benefits: To be eligible for long-term capital gains tax benefits, investors need to hold stocks for at least one year.
Key Differences Between Delivery Trading and Intraday Trading
Feature | Delivery Trading | Intraday Trading |
Time Frame | Minimum of one day | Same day |
Risk | Potentially lower risk | Potentially higher risk |
Transaction Costs | Higher transaction costs | Lower transaction costs |
Taxation | Equity delivery gain is a capital gains income and is taxed accordingly. | Intraday trading gains are business profit. |
Conclusion
Understanding delivery meaning in stock market helps investors build a stable portfolio and generate wealth over time. Unlike intraday trading, delivery in stock market allows traders to own shares permanently, receive dividends, and sell them at the right opportunity.
FAQ'S
What is delivery in stock market?
Delivery in the stock market refers to the process where purchased shares are transferred to the buyer’s demat account and held for more than one trading day. It means the investor actually takes ownership of the shares, unlike intraday trading where positions are squared off within the same day.
What are the benefits of delivery trading in the stock market?
Delivery trading allows you to:
- Hold shares long-term
- Avoid daily market volatility
- Participate in dividends and bonus issues
- Build wealth over time through capital appreciation
Can I sell delivery shares on the same day?
Yes, you can sell the shares on the same day, but that would be considered an intraday trade. For a trade to qualify as delivery, the shares must be held beyond the trading day and settled into your demat account.
Are there any charges for delivery in stock market?
Yes, delivery trades may involve brokerage charges, Securities Transaction Tax (STT), stamp duty, and other fees. However, many brokers offer zero brokerage on delivery trades to encourage long-term investing.
Is delivery trading better than intraday trading?
Delivery trading is ideal for long-term investors who want to build wealth over time, while intraday trading suits traders looking for quick profits within a single day. Delivery is generally considered safer and less risky compared to intraday trading.
