Settlement Cycle
The number of trading days between a trade's execution and the actual exchange of securities and money.
Formula
Settlement Date = Trade Date + N trading days, where N is 1 for the Indian T+1 equity cycle
Unit
days
In depth
India moved to a T+1 cycle in 2023, meaning shares and money change hands on the trading day after the trade, which is among the fastest in the world. A shorter cycle reduces the time counterparties are exposed to each other and lowers the margin the system must hold, but it compresses the window for correcting errors. The date matters for entitlements too: to receive a dividend you must hold on the record date, which requires buying before the ex-date given the settlement lag. Traders who sell shares bought the previous day should check that the credit has actually arrived before the sale settles.
Worked example
Buy on Monday under T+1 and the shares are credited on Tuesday, with money debited on Tuesday. Selling on Tuesday is permitted, but the position depends on Tuesday's credit arriving; if it does not, the sale becomes a short delivery.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Settlement Cycle” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.