Shares bought today or on Monday cannot be sold before September 10; here’s why

Settlement Holiday Today: Stock exchanges BSE and NSE will observe a settlement holiday on Friday, September 5, which means that though normal trading will be available, the settlement of any trade initiated on this day will commence from the next trading session. So, if you trade in a security in the ‘T+1’ settlement system, it will practically work like ‘T+2’ for one day, meaning one day will be added to the normal course of settlement. 

September 5 and September 8 will be settlement holidays, according to an NSE circular. 

“Settlement holidays for calendar year 2025, modification of circular NCL/CMPT/69875 dated August 26, 2025 on CM-Multiple settlements scheduled on September 08, 2025 and in reference to RBI press release 2025-2026/1042 regarding change in Public Holiday under Negotiable Instruments Act,” it noted. 

Stocks purchased on September 5 or 8 will be credited to the demat account on September 9. 

These stocks can be sold only from September 10. 

What is a settlement holiday and what does it mean for market participants on BSE and NSE?

A settlement holiday on bourses is a day when trading works as usual but without the following back-end settlement process.

Now, what is settlement? After you initiate a trade on Dalal Street, the stock is transferred to the buyer’s account and funds are credited to yours. In case of a settlement holiday, this process takes an additional trading session to execute.

Why does this happen?

It happens simply because banks and depositories involved in the clearing cycle are shut on a settlement holiday.

So, simply put, if you buy shares on a settlement holiday, the delivery and credit of those shares to your demat account will reflect a day later.

Similarly, if you sell shares that usually lead to funds being normally credited to your account the next day, on a settlement holiday, this will be pushed back by one working day.

Everything else works normally on the exchange. You can very much buy or sell securities, or trade in other available segments of choice.

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What’s happening now?

The market is observing two back-to-back settlement holidays. This means that settlement will be impacted by two trading days of delay.  

What are T+1 and T+2 settlement systems? 

T+1 is the standard cycle for nearly all equity trades on Dalal Street. Settlement in these securities takes place the next trading day after the day on which a trade is initiated.

A majority of stocks are currently settled under the ‘T+1’ system.

T+0 settlement — currently available in a few stocks — involves settlement on the same day as the day on which a trade is initiated.

Market regulator SEBI plans to expand this faster settlement method to the rest of the market in phases.