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What is settlement cycle?

Settlement cycle also referred to as settlement period refers to the duration of a trade settlement i.e. it is the period in which the buyer and seller of stock have to settle their obligation to each other. Buyer’s obligation is to make payment while the seller must deliver the sold stock.

Equity cash has a T+2 settlement cycle. So if you have bought stock today which is also called as (T-day or Trading day) it will get deposited in your Demat account only on T+2 days.

Scenario Stock are bought On Stock Deposited in Demat a/c on
1 Monday Wednesday
2 Wednesday Friday
3 Wednesday Monday
4 Friday Tuesday

 

Please Note* In scenario 1, 2, and 4 the stocks are deposited/settled as expected on T+2 day but for scenario 3 the stocks are deposited/settled on T+3 day since there was a stock market holiday on either T+1 or T+2 day and as result the stock deposit/settlement got postponed to the next possible Trading day.