Equity delivery, also known as delivery-based trading, is a method of trading in the stock market where you purchase shares and hold them in your demat account for an extended period. Unlike intraday trading, you have complete ownership of the shares and can sell them at your convenience to maximize profits. In delivery trading, there is no time constraint for selling the shares as you can hold them for as long as you want. It’s important to note that you need sufficient funds in your account to buy shares in delivery, as no margins are provided. This trading approach allows for long-term investment and potential capital appreciation.
Investment Tips for Equity Delivery:
1. Diversify Your Portfolio: Avoid putting all your investment capital into a single stock. Instead, diversify your portfolio by investing in different companies from various sectors. This reduces the risk and increases the potential for earning profits if any specific sector performs well.
2. Conduct Thorough Research: Before buying shares, conduct comprehensive research on the companies you are interested in. Analyze their financial health, growth prospects, competitive position, and industry trends. This will help you make informed investment decisions.
3. Exercise Patience: Remember that the stock market is volatile, and prices fluctuate regularly. Be patient and avoid panicking when prices dip. Unlike intraday trading, delivery-based trading allows you to hold shares for a longer duration. Wait for the shares to reach their cost price or for favourable market conditions before considering selling.
4. Keep Updated: Stay informed about the market and relevant news that may impact your investments. Keep track of company announcements, industry developments, and economic indicators. This will help you make timely decisions and take advantage of favourable opportunities.
5. Set Realistic Expectations: Investing in equity delivery requires a long-term perspective. Set realistic expectations and avoid getting swayed by short-term market fluctuations. Focus on the fundamentals of the companies you invest in and assess their growth potential over time.
Benefits of Equity Delivery
Delivery-based trading offers a bunch of benefits-
Since there is no time involved, you can hold on to the shares when the market is bad, and sell them only when the prices suit you.
Some banks and finance firms give loans based on your shares. So, when you are going through a difficult time, your shares come in handy.
If you see that a company is making a profit, then you can announce a dividend per share. Then, holding shares of these companies will fetch you dividends on each share.
When you keep your money in a bank, you get a yearly interest of 9% or 10%, at the most. However, in case you put that money into buying shares of companies that are growing, you can get returns that start from a minimum of 15%. Some shares will even give you returns of as much as 30 to 40% in a year. The best share market gains are when you trade long-term.
In case a company makes a large profit, it might announce bonus shares. If they declare 1:1, it means that you might get a share free with the shares you have.
