Delivery Quantity (DQ): Meaning and its importance
We are all very much aware about daily volume of a share which means the number of shares traded in a stock exchange on a particular day. Also it is always mentioned in the market related information that the volume of the share is increasing and we may expect the price to go up. So the number of shares traded on a particular day is an indication about the share movement either up or down.
There is one more term called “Delivery Quantity” or simply mentioned as “DQ or Deliverables” and generally the DQ is mentioned as a percentage on the total volume traded. What is the meaning of DQ? How does this calculated? What is the importance of DQ in deciding the trend of a share?
For example, a particular company’s volume on a day is 10 Lac shares and the delivery quantity is 6 Lac shares (data published by exchanges on daily basis). Even though 10 Lac shares being traded, out of which only 6 Lac shares are taken delivery. This means, balance 4 Lac shares are being bought and sold in the same day (intraday). Hence delivery quantity is 6 Lac shares or DQ 60%. This means that 6 Lac shares are taken delivery and the buyer had decided to hold it expecting price might increase in the coming days. When shares are taken delivery there is interest in the market to buy and hold the shares. This clearly shows the market sentiment or the sentiment of market participants that the share price will increase. Hence if the delivery quantity (DQ or Deliverables) increases we can expect a price increase in the share since many people are interested to buy and hold.
If the DQ is increasing compared to previous day, we keep an eye on price movement of the share in coming days. As usual, we need to understand that increase in DQ alone is not an indicator for price increase – this is one among many factors. There are certain shares which cannot be bought and sold on the same day i.e., intraday trading is not allowed in exchange, that means we have to take delivery and we can sell only after the shares are credited in our demat account. Normally shares bought will be credited in our demat account on 2rd day after buying (T+2 days).
Shares for which intraday trading is not allowed are classified as Trade-To-Trade basis and for those shares DQ will be 100%. So looking in to the deliverables will not be applicable for those shares which are classified as Trade-to trade because every day the DQ will be 100% and hence we will not be able to see whether the DQ is increased or not. For those shares which are on Trade-To-Trade basis, daily traded volume is the indicator.