What Is Delivery Trading in Stocks?
Delivery trading refers to buying shares and having them delivered to your demat account, meaning you hold them overnight and for as long as you choose. Unlike intraday trading where positions must be closed the same day, delivery trading allows you to hold stocks for days, weeks, months, or years. It is the most basic form of stock market participation and is suitable for beginners and long-term investors alike.
How Delivery Trading Works
When placing a delivery buy order, select "CNC" (Cash and Carry) in your broker's trading terminal. The full purchase value is debited from your account (no leverage for delivery trades). Under India's T+1 settlement system, purchased shares are credited to your demat account the next business day, and cash from sales is credited to your bank account the next business day.
Delivery vs. Intraday Trading
- Time horizon: Delivery = hold as long as desired; Intraday = same day only.
- Leverage: Delivery = no leverage (full payment required); Intraday = 3-5x leverage available.
- Risk: Delivery = no forced square-off risk; Intraday = automatic square-off if not closed by 3:20 PM.
- Tax treatment: STCG (20%) if sold within 1 year; LTCG (12.5% above Rs 1.25 lakh) if held beyond 1 year.
- STT: Both buy and sell legs attract STT for delivery; only sell side for intraday.
Who Should Choose Delivery Trading
Delivery trading is ideal for:
- Investors who cannot monitor markets during trading hours.
- Beginners building market experience without the pressure of same-day square-off.
- Those following fundamental analysis and investing based on business quality rather than daily price movements.
- Long-term investors seeking wealth creation through quality stock ownership over years.
Tax Efficiency of Delivery Trading
Holding delivery shares for more than 1 year qualifies for LTCG tax treatment at 12.5% (above Rs 1.25 lakh per year), significantly lower than STCG at 20% for holdings under 1 year. This tax advantage, combined with the elimination of daily trading pressure, makes delivery trading more appropriate for most retail investors compared to intraday trading.
Key Takeaway
Delivery trading is the foundation of stock market participation in India. It allows investors to own shares of quality businesses for the long term, benefiting from capital appreciation, dividends, and favorable LTCG tax treatment. It is the recommended starting point for all stock market beginners and remains appropriate for most investors throughout their investing career. Use the Lemonn app to research stocks, track holdings, and make informed delivery trading decisions in Indian equity markets.
