Tips to Convert Intraday Positions into Delivery

Intraday trading, the thrill of buying and selling stocks within the same trading day, is a popular option for many Indian investors. However, situations might arise where you want to hold onto a stock you bought for intraday trading. This blog equips you with valuable insights on converting intraday positions to delivery in the Indian stock market.

Understanding Intraday and Delivery Trading

Intraday Trading

You buy and sell stocks within the same trading day. If not converted to delivery, your broker automatically squares off any positions remaining at the market closing bell.

Delivery Trading

You buy stocks intending to hold them for a longer period. These shares are deposited into your Demat account, allowing you to benefit from potential long-term price appreciation or receive dividends.

Why Convert Intraday Positions to Delivery?

There are several reasons you might choose to convert your intraday positions to delivery:

Unexpected Market Turnaround

If a stock price starts rising unexpectedly during the day, you might want to hold onto it to capture potential future gains.

Long-Term Investment Opportunity

You might identify a stock with long-term growth potential and decide to hold it beyond the intraday timeframe.

Delivery of Stock Benefits 

Aiming to receive dividends or participate in bonus issues that might be announced later.

Market Volatility

If the market becomes excessively volatile, converting to delivery can help you avoid potential losses from short-term price fluctuations.
 

Things to Consider Before Converting Intraday Position to Delivery

Before converting your intraday position to delivery, consider these crucial factors:

Steps to Convert Intraday Positions to Delivery

The process for converting intraday positions to delivery can vary slightly between brokers, but the general steps are as follows:

Login to Your Trading Platform

Access your online trading platform provided by your broker.

Locate Your Open Positions

Identify the specific intraday position you want to convert.

Look for the "Convert" or "Delivery" Option

Most platforms will have an option labeled "Convert," "Delivery," or similar, next to your open position.

Specify Quantity 

Enter the number of shares you want to convert to delivery.

Confirm Conversion

Review the details and confirm the conversion request.

Tips for Converting Intraday Positions to Delivery

Monitor Margin Requirements

Stay informed about the margin requirements for both intraday and delivery trading for the stocks you're interested in.

Plan Your Trades

Consider the potential margin implications and opportunity costs before converting intraday positions to delivery.

Start Small

If you're unsure, begin by converting a smaller portion of your intraday position to delivery to assess its impact on your portfolio.

Track Delivery Holdings 

Once you convert to delivery, your shares will be reflected in your Demat account. Regularly monitor your holdings and track their performance.

Tax Implications

Short-term capital gains tax 

Applies to profits from intraday trading held for less than one year. The tax rate depends on your income tax slab.

Long-term capital gains tax

Applies to profits from stocks held for more than one year. The tax rate is generally lower than the short-term rate.
 

Example Stock List for Potential Conversion 

(for informational purposes only)

Conclusion

Converting your intraday positions to delivery can be a strategic move to capitalise on long-term investment opportunities. By understanding the process, considering the associated factors, and planning your trades carefully, you can make informed decisions to navigate the Indian stock market with greater confidence.

Frequently Asked Questions

1. Which is more profitable, intraday or delivery?

Ans: Intraday trading aims for quick profits on short-term price movements, while delivery trading focuses on holding stocks for the long term. Both have their pros and cons. Intraday can be riskier but potentially more rewarding, while delivery offers potentially steadier returns but requires holding power.

2. Can I convert intraday to overnight (delivery)?

Ans: Yes, you can! This is called squaring off your intraday position and taking delivery of the shares. You'll need enough funds in your trading account to cover the full purchase price.

3. When should I convert intraday to delivery?

Ans: This depends on your trading goals and risk tolerance. Consider converting if:

• You find a fundamentally strong stock at a good price.
• You believe the stock has long-term growth potential.
• Market volatility makes intraday trading risky.

4. Is it OK to convert intraday to delivery?

Ans: Absolutely! It's a valid trading strategy. Here are some reasons you might do it:

• Strong belief in the stock's long-term potential: If you think the stock price will rise in the future, holding onto it (delivery) might be a good idea.
• Unexpected market movement: If the stock price goes against your intraday, converting to delivery can help you avoid further losses.

5. Can we short-sell in delivery?

Ans: No, short selling is typically not allowed in delivery trades in India. Short selling involves borrowing shares to sell them hoping to buy them back later at a lower price. Delivery trades require you to have the funds upfront to purchase the shares.