Since you don’t have any shares, you would not be able to deliver and would default, thereby causing a Short Delivery. Now assume you forgot to buy it! Now you’re left with no option but to deliver these 100 shares of Reliance on T+2. If you sell any stock for Intraday you are expected to buy it back by the end of the day to close your position. Here are a few common ones:Ī) You sold 100 shares of Reliance for intraday expecting the price of Reliance to go down. Now you’d be wondering how/why anyone would sell a stock and not deliver it? Well it can happen for various reasons. This default is called “ Short Delivery“. But sometimes it may so happen that you sell some stocks but these stocks are not present in your demat account and hence you would not be able to give delivery of these stocks on T+2 and would end up defaulting. X doesn’t have the 100 shares in his demat account, but he still sold them?Īs mentioned earlier, if you sell any stock on T day, you are obligated to deliver the shares on T+2. The broker would then recover the money from you and would also charge you an interest for the money that he has paid on your behalf to the exchange if you delay in payment.Ģ. So if a brokerage has let you buy stocks for delivery with no money in your trading account, then the brokerage is obligated to pay for these purchases to the exchange. When you as a client make a purchase of any worth, the exchange debits the money from the brokerage firm’s account that you are trading with. What if you don’t have Rs.80,000 in your trading account to buy the 100 shares?Īn exchange doesn’t directly interact with a client. 80,000 (800*100).īut what if you had one of the following situations on hand:ġ. X will get the sale proceeds equivalent to Rs. On T+2, i.e., Thursday, September 5, you will get delivery of the stock to your demat account and Mr. X (although in the markets you don’t get to know who you have bought it from). 800 and the seller of these 100 shares was Mr. Let us take an example, you bought 100 shares of Reliance on Tuesday, Septemat Rs. Similarly, if you sold the shares on Monday, you are required to give delivery of the shares on Wednesday after which you will get the proceeds from the sale (cash) to withdraw on Wednesday (T+2 day). What this means is that when you buy shares on, say, Monday (also called T day), you get the shares on Wednesday (T + 2 day). Equity delivery based trading in India works on a T+2 rolling settlement cycle.
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