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updated on 20 June 2017
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Deliverable volumes of select stocks zoom to 100 percent what does it mean
Some of the beaten-down stocks on Dalal Street are grabbing investor eyeballs these days, with their deliverable volumes shooting up to 100 per cent in percentage terms.
Videocon Industries, whose stock has been hitting lower circuit limits in last 20 days, has seen deliverable volume rising from 46.50 on April 28, 2017 to nearly 100 per cent on June 16, 2017 on NSE.
The percentage of deliverable quantity to traded quantity on the counter stood at 46.50 per cent in April 2017 on the exchange.
The stock has plunged 78 per cent to Rs 22.20 on June 16 from Rs 100.45 on May 19 amid fears that the company may fail to service its debt obligations after two lenders declared its account as non-performing asset (NPA).
A rise in deliverable volume with falling stock price indicates bearishness on the stock on that particular day.
Trading volume on a counter on any given day comprises a significant share of intraday trades and deliverable trades. In case of the former, shares do not move from one demat account to another as they these trades get squared off within the session, whereas in the case of the later, shares shift from one account to another.
For instance, if total traded volume of share A is 100 on a given day and delivery volume is 50 per cent, it means out of 100 shares, 50 shares actually changed hands, moving from one owner to another.
A spike in deliverable volume, when read with the stock price movement, can reflect the short-term trend on the counter. A rise in deliverables along with a rise in stock price would show bigger buyers’ demand and vice-versa.
However, just because the percentage of deliverable volume is higher, it may not be an indication to buy a stock. If the percentage of deliverable quantity is high and the stock is declining, it is a warning signal that the downtrend may continue.
Shilpi Cable, whose share price crashed in last one month, also had 100 per cent deliverable volume on June 16.
Besides Videocon and Shilpi Cable, seven other stocks from the NSE500 index witnessed over 90 per cent deliverable volumes on June 16.
For Crisil, the deliverable volume stood at 99.80 per cent on June 16, rising from 88 per cent on May 31, 2017 and 83.50 per cent on April 28, 2017. The stock is down nearly 15 per cent on a year-to-date basis till date.
DB Corp, 3M India, Thermax, Ahluwalia Contract and Thyrocare Technologies are the other stocks on the list, which have given up to 62 per cent return to investors and their deliverable volumes have surged from around 65-80 per cent to over 90 per cent since April 2017.
A surge in delivery percentage of a stock indicates accumulation or distribution patterns of strong hands buying or selling the scrip. Day traders prefer highly-traded scrips with low deliverable quantity, but investors should observe delivery percentage with stock price movements. A rise in delivery percentage along with an increase and drop in stock prices indicates bullish and bearish trend, respectively. A drop in delivery percentage with an increase in stock price indicates that the scrip is in the grips of traders or speculators and the price uptrend is not sustainable while a drop in delivery volume as well as the stock price indicates a trend reversal.”
PNB Housing Finance, which has almost doubled investor wealth since the beginning of the year, clocked 29.50 per cent deliverable volumes on NSE and 90.52 per cent on BSE on June 16 against 55.30 per cent, 59.70 per cent and 55.10 per cent on the last day of preceding three months. The stock has surged 97.39 per cent to Rs 1,643.45 till June 16 from Rs 832.60 on January 2.
Nine stocks in the CNX500 index have surged over 100 per cent this calendar year till June 16. However, there deliverable volumes stood between 15 per cent and 68 per cent as of Friday.
Shares of Future Retail has surged 186 per cent YTD, but its deliverable volumes stood at 54.30 per cent, 64.80 per cent and 71.30 per cent on May 31, April 28 and March 31, respectively. Latest deliverable volume of Future Retail stood at 53.80 on June 16.
Market veterans say buying or selling a stock based on deliverable volume may burn your fingers.