What is Equity Delivery?
When newbies hear the term ‘equity delivery’, they feel they will receive the delivery of equities just like they receive the products ordered from Amazon. However, that’s not how it works entirely. While you do receive your equities, you receive them in digital form in your Demat account.
Before the introduction of the Demat account in 1996, shares were delivered to the investor’s home. But the instruments are now electronic.
Defining Equity Delivery
When you buy shares and hold them with you for a long period, it is equity delivery. You have no obligation to sell, and therefore, you can hold the shares in your Demat account for a month, a year, or a decade as per your convenience.
How to Buy Delivery Shares?
If you wish to buy equity delivery of 5 shares of a particular company, you need to start by logging into your trading account online. The login details for your trading terminal will be provided by your broker.
After you have logged in, search for the share you wish to purchase. All details related to the stock will appear. You can input your desired price and the order type. On completing the transaction, the shares will be electronically delivered to your Demat account. The delivery takes 3 days.
Advantages of Equity Delivery
Equity trading in India offers several benefits. These include:
- Time: If you feel that a company has strong fundamentals and will grow in the future, you can buy the stocks and hold them. There is no need for you to book loss even if the stock isn’t performing well. You can hold the stock for as long as you want. You can sell it when the time is good, and you see there is a profitable opportunity.
- Collateral margin: You can pledge the holdings you have in your Demat account. Doing so gets you additional margin in your trading account online.
Also Read: What is Collateral Amount in Demat Account?
- Dividends: When you take delivery of shares, you are an investor and become part-owner of the company. Consequently, if the company announces bonus shares or dividends, you can receive the benefits as a shareholder. Moreover, you can make the most of the rights issue. Rights issue means that the company can offer additional shares to the existing shareholders.
- Capital appreciation: Stock values change over time. If there is an increase, the increased value after your purchase is called capital appreciation. For instance, if you bought 5 shares of Reliance at ₹2,100, your total investment value is ₹10,500. After one year, if the price of the share rises to ₹3,400, your investment value becomes ₹17,000. The trade helps you earn a capital appreciation of ₹6,500.
Tips to Capitalise on Equity Trading in India
As the meaning of delivery trading and its benefits are clear, let us see what you can do to maximize your profits in equity trading:
- Be patient: The volatility of the share market will test your patience regularly. The shares you buy always have the chance to go up or down. If you see a dip downwards, don’t worry about the worst and sell your shares. There is no fixed period for which you have to hold the shares. Keeping calm increases your chances of making a profit.
- Mix and match: As the saying goes, don’t put all your eggs in one basket, the approach holds for buying shares as well. Do not invest all your money in the shares of one company. Try and build a mixed bag.
The bottom line
You receive deliveries of shares in your Demat account after completing equity trading online. You can hold these shares in your Demat account for as long as you like, whether it is for a month, a year, or a decade. There is no obligation to sell. The settlement cycle of the shares is T+2.
Trading online in equities allows you to earn profits in the form of dividends and capital appreciation. Moreover, you can pledge your holdings to continue trading in India in Equity Intraday, Futures, and Options Selling.
Share Market Knowledge Centre
- Demat account
- Share market
- Trading account
- Online share trading
- Intraday trading
- Futures trading
- Commodities trading
- Currency trading
What are Equities/ Equity Shares?
Shares are believed to offer the best potential returns on investment. The shares traded in the share market are equity shares. But, what are equity shares? What is their worth? Why are they traded in the share market?
What Are Stock Market Indices?
If you switch to any business news channel and listen to stock market updates, one of the first few things you will hear is the rise or fall of Sensex or Nifty. But what is Sensex or Nifty? These are stock market indices. That brings us to the next question – what is a stock market index?
What is LTP in Share Market?
As a stock market investor, you will come across many terms and jargon that can seem simple to look at. However, it is important to ensure that you understand all these terms well before making an investment decision based on them. One such term is LTP - the full form Last Traded Price.
Frequently Asked Questions
If you buy a share to hold, it is referred to as taking an equity delivery. It occurs when you buy a share and don’t sell it off the same day. Conversely, in delivery trading, you buy a share, hold it for as long as you want, and sell them when the opportunity is profitable. The period for which you hold the shares can be a week, a month, or also a year.
Equity delivery transactions go through a settlement cycle known as the T+2 cycle. It refers to Trading Day + 2 Working days before you receive the delivery of the stocks in your Demat account.
In intraday trading, the stock is bought and sold on the same day. The transaction is completed within stock market hours. In equity delivery, the shares/stocks are delivered after the settlement period.
When you buy stocks using your trading account online, they are stored in the Demat account in an electronic form.
With a free Equity Delivery trading plan, you get brokerage free trading for your equity deliveries.