Delivery Shockers – The January 2016 Edition

Let’s start with the obvious question: What are ‘Delivery Volumes‘ and ‘Traded Volumes‘?

Every stock that is listed on the exchange, will have 2 indicators based on volumes: The Total Traded Volumes (TTV), and the Delivery Traded Volumes (DTV). While TTV refers to the actual interest in the stock for that day, DTV refers to those trades that were not meant for intra-day, i.e. it actually leads to the investor taking ‘delivery’ of the stock into his/her DEMAT account. Stocks are traded every day and most stocks see intra-day trading (buy and sell on the same day). Intra-day trades don’t result in delivery – if two people buy and sell from each other and square off within the day, there will be volume, but no actual shares will change hands.

Delivery volumes as a percentage of total volume shows us how much of the stock is traded versus held for more than a day. It’s not very useful to use this data to trade per se.

Can anything be gleaned from this? Well, one can definitely get a few pointers from these metrics; whether or not they are indicators or trends or price movements, is up for debate.

But: One thing is for sure. When there is a strong up-move (or down-move) in a stock, and the delivery percentage is high, it means that more investors have traded shares with a longer-term view, rather a non-intraday move. So the upmove/downmove could be a much stronger indicator of the strength of the move, if the Delivery %ages are high. Conversely, if you see prices rising without a corresponding increase in the deliverable quantity, it could mean that the move is questionable.

Again, the operative word being ’could’.

There are a few interesting trading strategies that revolve around this concept, and you can find them all over the Internet.

We had written a quick post on this way back in 2007.

So we could quantify the theory as “Stocks which rise fast, and see a drop in delivery percentages, are a pattern that signify that a lot of trading is taking place in a stock, and that the rise is not sustainable”.

Every day as part of our Capsule product, we release a list of stocks which have seen massive increases in the “deliverable quantity to traded quantity %”. The Capsule product also comes with a list of all the Bulk and Block Deals of note that had occurred in a given trading day.

We have taken all the NSE-listed stocks as of Jan 29th (the last trading day of the month) and did a quick analysis on the following metrics:

– Price Change over the 20 trading days of January;

– Delivery Volumes over the 20 days, as a %age of Total Traded Volumes.

We then segregated them based on their market cap as Large Caps, Mid Caps and Small Caps.

The Top and Bottom 10 Large-Caps:

The ones in Green are the Top 10 stocks with the highest Delivery Percentages, and the ones in Red are those with the lowest Delivery %ages.

What is fascinating to note here, is that only one of these 20 stocks saw their price rise; and it was Essar Oil, a stock that is soon to be de-listed.

1. PnG topped this month with 90.85% of their trading volumes being delivery-based trades. The stock moved down slightly this month, with a 1.3% decline.
2. Cummins India and Bajaj Holdings both shed over 10% in January, with Delivery %ages of 82.68% and 82.66% resp.
3. IDFC Bank shares declined 13.6%, with a 76.63% Delivery %age.

Towards the end of the table (the items in red) are the ones that throw up some interesting numbers; they have lost a tremendous amount in Market Cap. These are the stocks with the lowest Delivery %age for the month of January.

1. IDBI Bank! 33.9% drop in price but only a 24.61% delivery ratio.
2. IndiGo and Reliance Comm declined a shade below 30% last month, with 29.2% and 29.6% drops respectively. Their overall Delivery volumes were quite low too – 24.61% and 14.62% resp.

The Top and Bottom 10 Mid-Caps:

Again, barring the one stock (Nilkamal), the rest of the shares have declined in January. The markets haven’t been kind on anyone, it would seem.

• TTK Healthcare and Sadbhav Infra lost 13.6% and 12.2% resp, with Delivery ratios of 96.27% and 92.18% resp. For the record, Sadbhav Infra has shown up quite often in our Daily Delivery Shockers.
• Reliance Industrial Infra shed 26.7% while it had a very low Delivery ratio of 13.68%.
• Jet Airways had a measly 9.37% Delivery %age, meaning that more than 90% of the Volume traded was Intra-day trades. Doesn’t really show the stock in great light. The stock lost 14.3% of its share price.

The Top and Bottom 10 Small-Caps:

And finally, our Top and Bottom 10 in the Small Cap stocks.

• Gujarat Apollo had less than 8% of their stock in Intra-day trades, and the stock lost 1.4% in January.
• Sathavana Ispat, a company involved in the manufacture and sale of Pig Iron, Metallurgical Coke and generation of Thermal Power, saw their shares rise 15.2%, while Delivery Volumes were 81.24% of Total Traded Volumes.
• Rushil Décor saw their shares drop 23.4%; but most of the trades were intra-day.
• RR Mohota Spinning is a stock that has consistently shown up on our Daily Delivery Shockers. Their shares plummeted over 40%! However, they were mainly intra-day trades, as Delivery %age was as low as 12.72%.

And there we have it; the Top and Bottom 10 Large Cap, Mid Cap and Small Cap stocks based on their Delivery percentages. This will be a regular monthly feature at Capital Mind. Do let us know your thoughts!