Understanding Shares vs Holdings

In stock market terminology, shares and holdings are often mentioned together, but they describe different aspects of portfolio ownership. One refers to ownership in a specific company, while the other reflects the combined record of securities held across a portfolio.

This article explains how shares and holdings differ in definition, scope, and reporting, and how each is represented within a demat account or trading platform.

Shares represent the basic unit of ownership in a company and form the foundation of equity participation in capital markets. When a company raises capital by issuing shares, investors who purchase them acquire a proportionate ownership interest in that business, along with associated rights and economic exposure.

Shares are traded on stock exchanges and their prices fluctuate based on demand, performance, and market sentiment.

Types of Shares

Equity Shares

Equity shares are the most widely issued and traded category of shares. They generally carry voting rights, allowing shareholders to participate in key corporate decisions such as electing directors. Returns are not fixed and depend on company performance, dividends declared, and market price movements.

Preference Shares

Preference shares provide holders with priority over equity shareholders in dividend payments and during liquidation of the company. Dividends are usually fixed or predetermined, but preference shareholders typically do not carry voting rights except in limited circumstances defined under company law.

Bonus Shares

Bonus shares are additional shares issued by a company to existing shareholders without any additional cost. They are distributed from accumulated reserves or profits and increase the number of shares held, although the overall investment value adjusts proportionately based on market price.

Rights Shares

Rights shares are offered to existing shareholders in proportion to their current holdings, usually at a price determined by the company, which may differ from the prevailing market price. This allows companies to raise additional capital while giving existing shareholders the opportunity to maintain their ownership percentage.

Together, these categories illustrate how companies structure ownership and capital distribution while defining the rights and benefits associated with shareholding.

Holdings refer to the total set of securities recorded in a demat account or portfolio at a given point in time. This includes shares and other listed instruments, providing a consolidated view of ownership across asset types.

A holding may include:

• Shares across multiple companies

• Mutual fund units

• Bonds or debentures

• ETFs

• REITs and other listed instruments

Holdings are reflected through broker platforms or depository records and represent the combined snapshot of securities credited to an account after settlement.

Although closely linked, shares and holdings operate at different levels within the investment process.

Portfolio Tracking

Shares represent ownership in individual companies, while holdings present a consolidated snapshot of all securities in an account. Holdings are typically used to display overall portfolio composition, including quantities, current values, and exposure across instruments such as equities, ETFs, and mutual funds.

Tax Reporting

Tax calculations are based on specific share transactions, using the purchase and sale dates of individual shares to determine capital gains or losses. Holdings, on the other hand, show unrealised gains or losses at a portfolio level based on prevailing market prices, which may differ from realised taxable outcomes.

Corporate Actions

Corporate actions such as dividends, bonus issues, or rights offerings are applied based on the number of eligible shares held on the record date. Their financial or quantity impact is subsequently reflected within overall holdings once processed by exchanges and depositories.

In simple terms, shares capture company-level ownership, while holdings provide a portfolio-wide snapshot.

Suppose a Demat account contains:

• 50 shares of Company A

• 30 shares of Company B

• 10 ETF units

• Mutual fund units worth ₹10,000

Here:

• Shares relate specifically to Company A and Company B.

• Holdings represent the combined record of all listed securities credited to the account.

Equity trades in India follow a T+1 settlement cycle:

• On T (trade day), the transaction is executed.

• On T+1, securities are credited to the Demat account and reflected in holdings.

Until settlement is completed, purchased shares may not appear in holdings. Delivery-based selling before settlement is generally restricted by brokers to avoid settlement mismatches.

Frequently observed misunderstandings about shares and holdings:

Shares reflect ownership immediately

Ownership is recognised only after shares are credited to the demat account post-settlement.

Holding value equals realised profit

Holding value reflects prevailing market prices. Actual gains or losses are determined only when securities are sold.

Bonus or split shares appear instantly

Corporate action credits typically follow exchange and depository timelines and may take several days to reflect in holdings.

Shares represent ownership in individual companies, while holdings provide a consolidated view of all securities credited to a demat account. This distinction explains how transactions, settlements, and portfolio records are structured across trading and depository systems.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.