Delivery Trading

Delivery trading means buying stocks and holding them for a longer period, usually more than a day to earn from long-term growth and dividends.
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Delivery Trading
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3 mins
10 April 2025

Delivery trading is the most common form of trading in India, where investors buy stocks by paying the full amount and hold them in their Demat account for a longer period. Unlike day traders who buy and sell on the same day, delivery traders aim for long-term growth and stability. It’s considered a safer and more reliable approach, especially with proper planning and risk management. While delivery trading offers several benefits, such as potential returns and dividends, it also comes with certain charges that investors should be aware of before getting started.

Delivery trading is a traditional way of investing in the stock market where you buy shares and hold them for more than one day, or even for the long term, to earn profits or dividends. It involves the actual transfer of ownership, with the shares being stored in your demat account. Unlike intraday trading, you don’t need to sell the shares on the same day. This method allows you to stay invested for as long as you want, making it a popular choice for long-term investors.

Also read: Types of Stock Trading

How delivery trading works?

Delivery trading involves purchasing financial instruments—typically shares—with the intention of taking full ownership. When you place a buy order through a stockbroker, it is matched with a corresponding sell order in the market. Once the trade is executed, the settlement process begins: you make the payment, the seller delivers the shares, and these are then credited to your Demat account. This process makes you the legal owner of the shares, giving you the flexibility to hold them for as long as you choose. It is a preferred approach for investors looking to build long-term wealth through potential capital gains, dividends, and portfolio diversification.

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Delivery trading example

Meet Ravi, an aspiring investor looking to engage in delivery trading. Ravi believes that XYZ Ltd., a technology company, has strong growth prospects over the next few years. He decides to purchase 100 shares of XYZ Ltd. at the current market price of Rs. 500 per share.

Ravi places an order for 100 shares of XYZ Ltd. The order is executed, and Ravi's Demat account is credited with 100 shares of XYZ Ltd. The settlement date is set for one trading day after the transaction.

Over the next two years, XYZ Ltd. experiences significant growth due to successful product launches and increased demand for its services. The stock price of XYZ Ltd. rises to Rs. 750 per share.

Recognizing the opportunity for profit, Ravi decides to sell his shares of XYZ Ltd. He places a sell order with his broker, and the shares are debited from his Demat account. The settlement process is initiated, and T+1 day later, Ravi receives the funds from the sale in his trading account.

In this example, Ravi engaged in a delivery trade by purchasing and holding shares of XYZ Ltd. for a substantial period. His decision to hold the shares paid off as he benefited from the substantial price appreciation, leading to a profit.

What are the advantages of delivery trading?

 

  • Ownership and control: Delivery trading offers complete control over your shares. You decide when and how much to sell, based on your investment strategy.
  • Long-term wealth creation: Holding shares for the long term enables you to benefit from the company’s growth and increasing share value over time.
  • Reduced risk exposure: Unlike intraday trading, delivery trading involves less risk since you're not forced to sell on the same day.
  • Additional income opportunities: As a shareholder, you’re entitled to dividends and may also benefit from stock bonuses, which can supplement your income while you hold the shares.

 

Delivery trading charges and minimum margin

The costs associated with delivery trading can differ depending on the stockbroker you use. Below are some of the common charges:

 

  • Brokerage fees: This is charged by your broker either as a flat rate per order or as a percentage of your transaction value.
  • Securities Transaction Tax (STT): A government-imposed tax on all stock exchange transactions.
  • Exchange transaction charges: Levied by stock exchanges such as NSE or BSE for facilitating trades.
  • SEBI turnover fees: A nominal fee of 0.00010% charged by the Securities and Exchange Board of India on the total trade turnover.
  • Margin trade funding: If you opt to buy shares using borrowed funds from your broker, you're required to provide a margin amount. The broker funds the remainder and applies an interest rate on the borrowed sum.

 

Delivery trading rules in the Indian stock market

Delivery trading 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: To engage in delivery trading, 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.

Difference between delivery trading and intraday trading

The main difference between delivery trading and intraday trading is the time frame in which the trades are executed. Delivery traders buy and hold the shares for a minimum of one day, while intraday traders buy and sell the shares on the same day.

Here is a table that summarises the 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 it is taxed accordingly. Intraday trading gains are business profit.

 

Conclusion

Delivery trading is a fundamental approach to investing in the stock market, allowing investors to take a long-term view of their holdings. It offers the potential for capital appreciation, dividend income, and reduced pressure to make quick decisions. However, it comes with its own set of risks, including market volatility and potential opportunity costs. Understanding the differences between delivery trading and intraday trading is essential for investors to choose the approach that aligns with their financial goals, risk tolerance, and investment strategy.

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Standard Disclaimer

Investments in the securities market are subject to market risk, read all related documents carefully before investing.

Research Disclaimer

Broking services offered by Bajaj Financial Securities Limited (BFSL) | Registered Office: Bajaj Auto Limited Complex , Mumbai –Pune Road Akurdi Pune 411035 | Corporate Office: Bajaj Financial Securities Ltd,1st Floor, Mantri IT Park, Tower B, Unit No 9 & 10, Viman Nagar, Pune, Maharashtra 411014| CIN: U67120PN2010PLC136026| SEBI Registration No.: INZ000218931 | BSE Cash/F&O (Member ID: 6706) | DP registration No : IN-DP-418-2019 | CDSL DP No.: 12088600 | NSDL DP No. IN304300 | AMFI Registration No.: ARN – 163403|

Research Services are offered by Bajaj Financial Securities Limited (BFSL) as Research Analyst under SEBI Regn: INH000010043. Kindly refer to www.bajajfinservsecurities.in for detailed disclaimer and risk factors

This content is for educational purpose only.

Details of Compliance Officer: Ms. Kanti Pal (For Broking/DP/Research)|Email: compliance_sec@bajajfinserv.in/Compliance_dp@bajajfinserv.in |Contact No.: 020-4857 4486 |

Investment in the securities involves risks, investor should consult his own advisors/consultant to determine the merits and risks of investment.

Frequently asked questions

What is delivery trading?

Delivery trading is a common form of stock trading in India where investors buy shares by paying the full amount upfront. These shares are then transferred to their Demat account, giving them legal ownership. Unlike other trading forms, there is no margin involved, and investors can hold the shares for as long as they wish.

Is delivery trading profitable?

Yes, delivery trading can be profitable, particularly for investors who take a long-term view. By holding shares over time, you have the opportunity to benefit from a company’s growth, capital appreciation, and dividends. However, your returns will largely depend on thorough research, sound strategy, and overall market conditions.

Is delivery better than intraday?

Neither is universally better—it depends on your personal investment goals and risk appetite. Intraday trading suits active traders looking for quick gains within a single trading session, often requiring close market monitoring. Delivery trading, on the other hand, is more suited for those seeking long-term wealth creation with a more patient, hands-off approach.

Can I convert intraday to delivery?

Yes, you can convert an intraday trade to a delivery trade. To do so, you'll need to pay the full purchase amount, as delivery trading requires 100% of the share value upfront. This conversion is subject to your broker’s policies and available funds in your trading account.

Is delivery trading risky?

Delivery trading is generally considered less risky compared to intraday trading, as it involves long-term holding of shares rather than short-term price movements. Nonetheless, it still carries risks such as market fluctuations and company-specific challenges, making it essential to conduct proper research and manage risks wisely.

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Standard Disclaimer

Investments in the securities market are subject to market risk, read all related documents carefully before investing.

Research Disclaimer

Broking services offered by Bajaj Financial Securities Limited (BFSL) | Registered Office: Bajaj Auto Limited Complex , Mumbai –Pune Road Akurdi Pune 411035 | Corporate Office: Bajaj Financial Securities Ltd,1st Floor, Mantri IT Park, Tower B, Unit No 9 & 10, Viman Nagar, Pune, Maharashtra 411014| CIN: U67120PN2010PLC136026| SEBI Registration No.: INZ000218931 | BSE Cash/F&O (Member ID: 6706) | DP registration No : IN-DP-418-2019 | CDSL DP No.: 12088600 | NSDL DP No. IN304300 | AMFI Registration No.: ARN – 163403|

Research Services are offered by Bajaj Financial Securities Limited (BFSL) as Research Analyst under SEBI Regn: INH000010043. Kindly refer to www.bajajfinservsecurities.in for detailed disclaimer and risk factors

This content is for educational purpose only.

Details of Compliance Officer: Ms. Kanti Pal (For Broking/DP/Research)|Email: compliance_sec@bajajfinserv.in/Compliance_dp@bajajfinserv.in |Contact No.: 020-4857 4486 |

Investment in the securities involves risks, investor should consult his own advisors/consultant to determine the merits and risks of investment.

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