BSE NSE Rising VDP in Share Market, Stock Market Index Analysis
BSE NSE Rising VDP in share market is a technical refinement of our delivery volumes.
Delivery purchase refers to actually taking the shares into your demat account and
delivery sales refers to the actual giving out of shares from the demat account.
The delivery volumes need to be seen as distinct from the intraday trading volumes.
Intraday trades are speculative in nature and are purely from a trading or speculative
perspective. When delivery volumes in a stock a rising it is a signal that the stock
is attracting more of delivery compared to speculative volumes. From a stock market
point of view delivery is always welcome as well as it is on the buy side but not
so welcome when it is on the sell side. In contrast to the pure delivery percentage
of deliveries, the VDP or the Volume Delivery Percentage looks at the trend of the
delivery volumes. You can see this trend over a period of few days, weeks or even
Stock Market Index Analysis using VDP on LKP Research…
LKP has a dedicated page for Volume delivery percentage which captures the trend
in VDP over a number of days. Since the quantity can be different on different days,
the data is converted into a delivery percentage and then plotted over a time series.
On the LKP Securities VDP page you can soft the rising VDP stocks and the falling
VDP stocks on the BSE and the NSE. Of course, if you are looking at a much broader
universe of mid-cap and small cap stocks then BSE would be a better bet. Else the
NSE would be a better bet if you are trying to capture the VDP on large cap stocks.
Some points to keep in mind with VDP…
BSE NSE rising VDP in share market should be interpreted subject to certain basic
assumptions. That is when it becomes really useful from a stock market index analysis
point of view…
- Be cautious on very small cap or mid cap stocks where the capital
base is very small. Such stocks could be candidates for manipulation of prices and
you need to take the VDP data after adjusting for such vagaries in capital base
and historical volumes.
- The trend of VDP (rising or falling) must always be assessed with
respect to price movements. If consistently rising VDP is accompanied by rising
stock prices then it is a signal that something interesting is happening. Similarly,
when stock prices are falling in tandem with rising VDP you need to be extra cautious
as it is a sign of delivery selling.
- When it comes to small and mid caps you can decipher larger sectoral
trends by looking at the VDP data. If you combine the sectoral data you can actually
glean useful insights into sectoral picks and identify such stories well in advance.
Rising VDP can be a good stock market indicator provided it is used prudently. Nevertheless,
VDP remains a key decision point for traders and investors.