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How to Analyze Security Wise Delivery Position?

Security Wise Delivery Position analysis
Security Wise Delivery Position analysis

Security Wise Delivery Position means no of shares marked for delivery from the total traded quantity. In my opinion, Security Wise Delivery Position is one of the crucial analysis. In layman terms, it tells how many investors are willing to accept the shares in their demat account. A higher delivery quantity means serious trading and balance is intraday play. Most of the analysts give importance to volume or traded quantity. On the other hand, as an investor i give more importance to Deliverable Quantity/Delivery Percentage. For example, total traded quantity of a Stock A is 100. Assuming out of 100, deliverable quantity is 60. It means balance 40 shares were traded intraday and only 60 shares are marked for delivery. The delivery percentage of 60% is very crucial in this example. We will discuss delivery percentage later in the post. Intraday is a speculative trade, therefore, you must have observed that stocks with high volume and low deliverable quantity are favorites of day traders. In my post, How to identify best trading stocks?, I shared some of the tips for traders. This post is dedicated to investors i.e. who wish to invest for long term. You can download daily Security Wise Delivery Position Report from NSE/BSE website. I will try to keep this post very simple and easy to understand.

Why you should not refer to Delivery Volume?

You must be confused with the subheading. Deliverable Quantity or Delivery Volume is, in fact, misleading in nature. Again i observed that analysts refer to delivery volume for Security Wise Delivery Position analysis. Let’s understand with a live example. Recently, there was a sudden spurt in the volume of Redington India. One fine day, the volume of a stock shoot up to 1161368 against last 5 days average of 244318 i.e. almost 5 times. As per Security Wise Delivery Position analysis, the delivery volume also jumped from 5-day Avg of 129754 to 273678. As an investor, i was happy that delivery volume doubled and without 2nd thought i would have invested in Redington India.

There is a catch. Though the delivery volume doubled but on the day of volume spurt my delivery % was only 23.57%. Whereas moving average was approx 50%. In short, huge speculative intraday activity on the day of volume increase. I would like to ask, can i invest based on volume or delivery volume in Security Wise Delivery Position analysis. The answer is NO as the traders/investors didn’t prefer to accept the delivery of stock and traded only for intraday gains. Another conclusion based on Security Wise Delivery Position analysis is that traders/investors were not sure about the stock prospect. In short, whether the stock price will rise further or not. Because of this reason they squared off their position in the stock same day.

Importance of Delivery Percentage

As we observed that delivery volume is not able to capture the sharp deviations in volume and intraday activity. In Security Wise Delivery Position analysis, an investor should check for Delivery Percentage i.e. % of Deliverable Quantity to Traded Quantity. This is one of the matrices to identify a stock trend. If there is an increase in Delivery Percentage then it implies that investors are accepting the delivery of the stock. Which in term imply that investors are bullish on stock i.e. they anticipate the stock price to increase further. The Security Wise Delivery Position file available on NSE website is for a single day. You need to capture this information over a period of time to establish the trend. As an investor, i don’t invest in stocks whose delivery percentage is less than 50%. In my Security Wise Delivery Position analysis, i observed that stocks with greater than 50% Delivery percentage provide more stable returns. Obviously Security Wise Delivery Position analysis cannot replace the fundamental analysis or any news driven upticks/downticks. The recent example is of Maruti. The stock sentiments suddenly turned negative after a downgrade from one of the foreign rating agency. There was sudden delivery based selling with the decrease in stock price. Therefore, as i keep highlighting that you should keep a watch on stocks on the daily basis. The concept of long-term investment is gone. Same hold true for Security Wise Delivery Position analysis. You should analyze your stock daily and check for any unusual movement in various stock parameters.

How to read Security Wise Delivery Position analysis?

During my Security Wise Delivery Position analysis, i observed strong co-relation between Delivery Percentage and the Stock Price. Let’s check all possible scenarios

(a) Increase in Delivery Percentage and Increase in Stock Price:

It shows BULLISH Trend in the Security Wise Delivery Position analysis. As i mentioned that it means investors are accepting delivery of stock i.e. buying for a long term. In this scenario, there is a possibility of further increase in stock price. Now it doesn’t mean that after increase when the delivery percentage cool off then you sell the stock. After the buying, the delivery percentage will cool off near long-term moving average. Recent examples in this category are ONGC, HDFC etc.

(b) Increase in Delivery Percentage and Decrease in Stock Price:

As i discussed in the case of Maruti, the increase in Delivery Percentage with a decrease in Stock Price means investors are offloading long positions. It is not a good sign for the stock and stock price may fall further. In short, Delivery based selling is a sign of Bearish Trend and investor should exit the stock. Some of the recent examples are Dish TV, Axis Bank, Amara Raja Batteries Ltd, IndiaBulls Housing Finance, Sun TV etc.

(c) Decrease in Delivery Percentage and Increase in Stock Price:

In Security Wise Delivery Position analysis, if you observe a decrease in delivery percentage then it implies stock is now in a grip of traders and speculators. It also implies very high intraday activity. Normally investors fail to identify this trend as the stock price is increasing. Though the stock price is increasing but be assured that this trend is normally short-lived. In past, i identified this trend in ICICI Bank and the stock collapsed afterward. Currently, i observe this trend in HDFC Bank, Oil India, Dr. Reddy’s, Adani Ports, Tata Motors etc. In short, price uptrend is not sustainable.

(d) Decrease in Delivery Percentage and Decrease in Stock Price:

A decrease in Delivery % and Decrease in Stock price during Security Wise Delivery Position analysis means there is a possibility of trend reversal very shortly. In other words, Stock is on the verge of a breakout. In layman terms, there is an increased intraday activity accompanied by a decrease in stock price. We can conclude that speculators/traders are offloading their positions. They are anticipating the reversal in stock price trend. Currently, i observe this trend in Yes Bank, Tech Mahindra, IOC etc. Based on the analysis, you may identify such stocks for good gains.

Words of Wisdom: The worst part of any stock analysis is that it is incomplete in a silo. You cannot conclude based on the single analysis. You need to support your findings with multiple analysis. Therefore, Security Wise Delivery Position analysis is also incomplete. An investor should not decide buying/selling of a stock only based on this analysis. For long term investment, Fundamental Analysis of a stock is a must. The multiple analysis including Security Wise Delivery Position analysis is indicators. Through these indicators, you can conclude the beginning or end of a stock trend. In my future posts, i will share details of more such analysis which i keep doing on a regular basis.

As a disclosure, i do not hold any positions in the stocks mentioned in this post.

Copyright © Nitin Bhatia. All Rights Reserved.

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7 years ago


Does high delivery % always mean buying in terms of delivery? If i sell 100 stocks that i was holding for a month…it will always have a corresponding buyer that will take their delivery. So in this case it will still add to the delivery % , isnt it? Please advise.

Nitin Bhatia
Nitin Bhatia
7 years ago

It is not necessary that Delivery based selling correspond to delivery based buying. A buyer may be buying for intraday.

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