Delivery Trading: Meaning, Settlement & Costs

What Delivery Trading Really Means

The word "delivery" in delivery trading carries its everyday meaning almost without modification. When a goods company delivers a package, the package moves from the seller's possession to the buyer's possession permanently. Delivery trading in the stock market works the same way. You place a buy order on NSE or BSE in the cash segment under the CNC (Cash and Carry) product type - the label most Indian brokers use for delivery orders - and once the trade is executed and the settlement cycle completes, the shares move from the seller's Demat account to yours.

This contrasts sharply with intraday trading, where you open and close your position within the same trading session. In intraday trading, shares are never actually delivered to your account; the buy and sell transactions net out against each other, and only the profit or loss changes hands. In delivery trading, you are not netting anything out. You are making a genuine transfer of ownership.

The CNC designation is important for practical reasons. When you mark an order as CNC, your broker's system knows not to auto-square it off at the end of the day. Many brokers will automatically square off open intraday (MIS - Margin Intraday Square-off) positions before market close to prevent unintended delivery. If you forget to mark your order correctly, you could end up in an intraday position when you intended a long-term holding, or vice versa. Always double-check the product type before submitting an order.

Delivery trading is available for equities (ordinary shares and preference shares listed on NSE and BSE), Exchange Traded Funds (ETFs), Real Estate Investment Trusts (REITs), and Infrastructure Investment Trusts (InvITs). Commodities traded on MCX or NCDEX have their own delivery mechanism, which is physically different - commodity delivery involves actual warehousing and logistics - so when market participants in India talk about delivery trading in the context of stocks, they almost always mean the equity cash segment.

One nuance worth understanding early is the concept of a "delivery trade" versus a "speculative trade" from a taxation perspective. Under Indian income tax law, if you hold shares acquired through delivery for more than a specified period and then sell them, the resulting gain or loss is classified differently from a gain or loss arising from intraday or futures trading. The specific thresholds and rates vary with each Finance Act, so always refer to the latest provisions. The key conceptual point is that the tax treatment acknowledges delivery trading as a distinct activity with its own character - one that participates in the ownership economy of Indian businesses, not merely in price fluctuations.

Finally, it is worth noting what delivery trading is not. It is not margin trading in the traditional sense - you cannot buy more shares than your cash balance permits in a standard delivery order (though margin against pledged shares under SEBI's framework is a separate facility). It is not futures trading, where positions are leveraged and cash-settled. And it is not options trading. Delivery trading in equities is the bedrock - the most straightforward way to participate in the Indian stock market.

The Settlement Cycle: From Trade to Demat Credit

Settlement is the process by which the exchange ensures that the buyer gets the shares and the seller gets the money after a trade is executed. Understanding settlement is critical because it determines when shares actually appear in your Demat account, when funds are debited from your account, and how quickly you can use those shares or funds for further transactions.

India moved from a T+2 settlement cycle to a T+1 cycle for equities in a phased manner starting January 2023, completing the transition across all listed stocks by the end of that year. "T" stands for the trade date - the day you actually buy or sell on the exchange. Under T+1 settlement, the exchange settles trades on the very next working day after the trade date.

Here is how the timeline unfolds in practice. Suppose you place a buy order on a Monday (which is a working day with no market holiday) and it gets executed during market hours (9:15 AM to 3:30 PM IST). Your broker will block the required funds from your trading account at the time of order placement. The trade is reported to the clearing corporation - either NSE Clearing Limited (NCL) or the Indian Clearing Corporation Limited (ICCL) for BSE trades. On Tuesday (T+1), the clearing corporation processes all the trades from Monday. By the end of Tuesday, shares are credited to your Demat account and the seller receives their money.

The practical implication for buyers is that although you can see your holdings reflected in your portfolio from the next day, the shares may be shown as "T1 holdings" by many brokers until the credit is formally complete. SEBI's framework allows brokers to show these early credits, but the shares are not available for pledging or off-market transfers until the settlement is fully processed.

For sellers, the funds from a delivery sale are typically available in your trading account on T+1. However, the timeline for withdrawal to your bank account depends on your broker's policy - many brokers allow same-day or next-day fund transfer requests.

Market holidays matter significantly in settlement. NSE and BSE publish an annual list of trading holidays. If T+1 falls on a market holiday, settlement moves to the next working day. This is worth keeping in mind around long weekends and festival seasons, when a trade placed on, say, a Wednesday before a two-day holiday might not settle until the following Monday.

The clearing corporation acts as the central counterparty (CCP) in every trade, which means it steps between the buyer and seller and guarantees settlement even if one party defaults. This counterparty guarantee is a cornerstone of market integrity and is why settlement failures at the individual investor level are virtually unheard of in Indian markets. SEBI mandates strict capital and margin requirements for clearing members to ensure this guarantee remains robust.

Short deliveries - situations where a seller cannot deliver the shares they sold - are handled through an auction process. The exchange buys shares in the auction market and delivers them to the buyer, recovering the cost (plus a penalty) from the defaulting seller. This protects buyers in all circumstances.

Understanding the settlement cycle also helps you plan your trades around corporate action record dates. Dividends, bonus shares, rights issues, and stock splits all have a record date. To be eligible for a corporate action, you must hold the shares in your Demat account on the record date - meaning your buy trade must have settled before that date. With T+1 settlement, you need to buy the shares at least one working day before the record date to be eligible.

The Demat Account: Your Ownership Register

Delivery trading is inseparable from the Demat account. The word "Demat" is short for dematerialised - a reference to the shift from physical share certificates to electronic records that India completed in the late 1990s. Today, every delivery trade in the Indian equity market is settled electronically through the Demat system, which is operated by two depositories: the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL). Every investor's Demat account is held with one of these two depositories through a Depository Participant (DP), which is typically your broker.

Think of the depository as a bank for shares. Just as a bank holds your money in electronic form and records every credit and debit, the depository holds your shares in electronic form and records every purchase and sale. Your Demat account statement is your proof of ownership. When you buy shares through delivery trading, the shares are credited to your Demat account. When you sell, they are debited.

To participate in delivery trading, you need three accounts working in tandem. First, a bank account - your source of funds. Second, a trading account with a SEBI-registered broker - this is the interface through which you place orders on NSE or BSE. Third, a Demat account - the repository where your shares are held. In practice, most brokers offer a linked two-in-one (trading + Demat) or three-in-one (bank + trading + Demat) account, which makes the flow of funds and securities seamless.

Maintaining a Demat account involves some costs: an annual maintenance charge (AMC) levied by the DP, and transaction charges for each debit (sale) instruction. Credits (purchases) are typically free. The AMC varies across DPs, ranging from zero for some discount brokers to a few hundred rupees per year for traditional full-service brokers. These costs are small relative to the value of holdings for most investors, but they are worth factoring in, especially for smaller portfolios.

Security is a crucial aspect of Demat accounts. NSDL and CDSL both offer features like Demat account freezing, which prevents any debits without your explicit authorisation. SEBI has also mandated that brokers cannot hold client securities in their own pool accounts - shares must be transferred to your Demat account promptly after settlement. This rule significantly reduces the risk of broker fraud or misuse of client securities.

One feature that delivery investors should be aware of is the Power of Attorney (POA). Traditionally, investors gave a POA to their broker, authorising the broker to debit securities from the Demat account at the time of sale. However, SEBI has moved towards a more secure system called DDPI (Demat Debit and Pledge Instruction), which limits the broker's authority and requires the investor's explicit, transaction-specific approval in many scenarios. Check with your broker to understand which mechanism is in use and how sale instructions are processed from your account.

Lastly, the Demat account is also where corporate benefits arrive. When a company declares a bonus issue, the additional shares are credited directly to your Demat account on the ex-date or record date. Rights issue entitlements appear in your account as "Rights Entitlements" (REs) that you can apply for, renounce, or sell in the secondary market. Understanding how your Demat account functions is therefore not merely administrative - it is central to realising the full benefit of delivery trading.

Costs Involved in Delivery Trading

One of the most important skills in delivery trading - and one that many investors overlook until it is too late - is understanding the full cost of every transaction. The headline brokerage rate is only the beginning. A complete cost picture includes statutory charges, taxes, and sometimes hidden fees that cumulatively affect your net return. Let us walk through each cost component systematically.

BROKERAGE: Brokerage is the fee your broker charges for executing your buy or sell order. In the delivery segment, most discount brokers in India charge either zero brokerage or a flat fee per order (a fixed amount regardless of trade size), while traditional full-service brokers typically charge a percentage of the transaction value. Always confirm your broker's delivery brokerage structure before you start trading.

SECURITIES TRANSACTION TAX (STT): STT is a statutory tax levied by the central government on every equity transaction. For delivery trades, STT is charged on both the buy side and the sell side. The rate is specified under the Finance Act and is subject to revision in each Union Budget, so refer to the current Finance Act for the precise rate. STT is collected by the exchange on behalf of the government and is deducted automatically from your account - you will see it as a line item on your contract note.

EXCHANGE TRANSACTION CHARGES: NSE and BSE each levy transaction charges on traded value. These are small but not negligible, especially for large trades. The charges differ between exchanges and are periodically revised.

STAMP DUTY: Stamp duty on share transactions is levied by the state government but collected centrally through the exchange under a uniform framework introduced in 2020. Under this framework, stamp duty is charged only on the buy side. The rate is specified in the Indian Stamp Act as amended and varies between delivery trades and other segments.

SEBI TURNOVER FEES: SEBI charges a small regulatory fee on turnover. While tiny, it appears on your contract note.

GOODS AND SERVICES TAX (GST): GST at 18% is levied on the sum of brokerage and exchange transaction charges. It is not charged on STT or stamp duty, as those are outside the GST framework.

DEPOSITORY CHARGES: When you sell delivery shares, the shares are debited from your Demat account. Your DP charges a small fee for this debit instruction - sometimes called a debit transaction charge or DP charge. This is typically a flat amount per ISIN (unique identifier per company) per day of settlement, regardless of the number of shares sold. This charge is often overlooked but shows up clearly on Demat account statements.

CAPITAL GAINS TAX: When you sell delivery shares at a profit, the gain is subject to capital gains tax. If you hold the shares for twelve months or less from the date of purchase, the gain is classified as Short-Term Capital Gain (STCG). If you hold for more than twelve months, it becomes Long-Term Capital Gain (LTCG). The tax rates for each category, including any exemption thresholds for LTCG, are defined in the Income Tax Act and are revised periodically in the Finance Act. Always refer to the current provisions for accurate rates.

TOTAL COST ESTIMATION: A practical approach is to add up brokerage, STT (buy + sell), exchange charges (buy + sell), GST on brokerage and exchange charges, stamp duty (buy side), and DP charges on the sell side, and then factor in the capital gains tax at exit. When viewed together, these costs form the "break-even" hurdle your delivery position must cross before it becomes profitable. For short-duration delivery trades, these costs are proportionally higher as a percentage of the expected gain, which is why delivery trading is generally better suited for holding periods long enough for the investment thesis to play out and for the business to create value that exceeds the transaction costs.

Delivery Trading vs Intraday Trading: Key Differences

Most new investors encounter delivery trading and intraday trading at the same time and wonder which is better. The answer is that they are different tools designed for different objectives, and comparing them requires understanding their distinct mechanics, risks, costs, and suitable use cases.

OWNERSHIP: The most fundamental difference is ownership. In delivery trading, you actually own the shares after settlement. In intraday trading, you never take ownership - you open and close a position within the same day, and no shares are ever deposited in your Demat account.

CAPITAL REQUIREMENT: Delivery trading requires you to pay the full value of the shares you buy. If you want to buy 100 shares at ₹500 each, you need ₹50,000 in your trading account. Intraday trading, by contrast, uses leverage - your broker provides a margin, allowing you to trade a larger position with a smaller amount of capital. While leverage amplifies potential profits, it equally amplifies losses, and intraday traders can lose more than their initial margin if a trade moves sharply against them.

HOLDING PERIOD: Delivery positions can be held for any duration - from the next day to decades. Intraday positions must be closed on the same trading day, typically before 3:15 PM IST (the precise auto-square-off time varies by broker).

RISK PROFILE: Overnight risk is a defining characteristic of delivery trading. When you hold shares overnight, you are exposed to news events, global market movements, earnings surprises, or geopolitical developments that occur when the market is closed. Your position opens the next day at whatever price the market sets, which could be significantly different from the previous close. Intraday traders avoid overnight risk by definition, but they face intense intra-session volatility.

STT: STT rates differ between delivery and intraday trades. For delivery trades, STT is charged on both the buy and sell legs. For intraday trades, STT is charged only on the sell side at a different (lower) rate. This makes the STT cost asymmetry something to factor in when comparing effective trading costs between the two segments.

TAXATION: Intraday equity trading gains are treated as speculative business income under Indian income tax law and taxed at the applicable income tax slab rate. Delivery trading gains are treated as capital gains - either short-term or long-term depending on the holding period - and taxed under the capital gains provisions of the Income Tax Act, which are generally more favourable for longer holding periods.

SUITABILITY: Delivery trading is generally more suitable for investors who have a view on a company's business prospects over months or years, who can withstand short-term price volatility, and who want to participate in dividends and other corporate benefits. Intraday trading demands active monitoring, quick decision-making, a strong understanding of technical analysis, and the emotional discipline to accept frequent small losses. Many financial educators note that intraday trading has a high learning curve and is statistically challenging for retail participants who lack institutional infrastructure.

For most retail investors in India, delivery trading in a diversified portfolio of quality businesses - combined with rigorous risk management and a long enough investment horizon - has historically been a more reliable wealth-building strategy than active intraday speculation. However, every individual's financial goals, time availability, and risk tolerance differ, and there is no universal prescription.

Delivery Trading vs Other Trading Styles: Swing, Positional & Futures

Beyond intraday trading, there are other styles that investors often compare with delivery trading: swing trading, positional trading, and futures trading. Understanding where delivery trading sits in this spectrum helps you identify which approach - or combination of approaches - suits your situation.

SWING TRADING: Swing trading typically involves holding a position for a few days to a few weeks, aiming to capture "swings" in price momentum. In the equity cash segment, swing trades are almost always placed as delivery orders (CNC), because positions are held overnight. The difference between a swing trade and a conventional delivery investment is primarily intent and duration - swing traders use technical analysis to identify short-term price movements and exit once the expected move plays out, while long-term delivery investors are anchored to the company's fundamental value. The tax treatment is the same: gains realised within twelve months are STCG, and beyond twelve months are LTCG.

POSITIONAL TRADING: Positional trading occupies a middle ground - positions are held for several weeks to a few months based on a blend of technical and fundamental analysis. Like swing trading, positional trades in equities use the CNC product type and involve delivery of shares. The primary distinction from long-term investing is the time horizon and the sensitivity to market cycles rather than business fundamentals alone.

FUTURES TRADING: Equity futures on NSE and BSE allow traders to take leveraged positions on stocks or indices without actually owning shares. Futures contracts expire on specific dates (monthly or weekly for index futures), and settlement is cash-settled for index futures and can be physically delivered for individual stock futures (though physical delivery of stock futures at expiry is a nuanced area). Futures trading requires understanding margin requirements, mark-to-market (MTM) settlements, rollover costs, and basis risk. Gains from futures trading are taxed as non-speculative business income in India, separate from delivery trading capital gains. The leverage in futures is significantly higher than in intraday equity trading, making it suitable only for experienced, well-capitalised traders.

From a cost perspective, futures trading involves brokerage, STT (at a lower rate than delivery, charged only on the sell side for futures), exchange charges, GST, and SEBI fees, but no DP charges (since no Demat credits/debits occur). The absence of STT on the buy side and the lower overall STT rate makes futures cheaper per rupee of notional exposure than delivery - a reason why many short-term traders prefer futures for large leveraged trades.

However, the absence of actual ownership in futures means you get no dividends, no bonus shares, and no voting rights. Corporate actions like dividends cause the futures price to adjust around the ex-date, affecting P&L in ways that differ from the direct benefit you receive as a delivery holder.

For a retail investor building long-term wealth in the Indian market, delivery trading remains the most transparent and ownership-oriented approach. It is the foundation upon which more sophisticated strategies - like covered call writing using futures or options against a delivery holding - can be built once the investor gains experience and understanding of derivatives markets.

Margin Against Shares and Pledging in Delivery

One of the commonly misunderstood features available to delivery investors is the ability to use their existing share holdings as collateral to obtain additional trading margin. This is often called "margin against shares" or "pledging of securities," and SEBI has a well-defined framework governing how it works.

Here is the basic concept: you own shares in your Demat account as part of your delivery holdings. Rather than selling those shares to free up capital for new trades, you can pledge them with your broker. The broker (as a clearing member) re-pledges them with the clearing corporation, which accepts them as collateral and provides margin credit to your trading account. You can use this margin to trade in the futures and options segment or to take intraday positions in equities.

The amount of margin you receive against pledged shares is not the full market value of the shares. The clearing corporation applies a haircut - a discount to the market value - to account for the price risk of the collateral. The haircut percentage varies by stock based on its volatility, liquidity, and classification in SEBI's risk framework. Blue-chip stocks in key indices typically attract lower haircuts (meaning more margin is released), while smaller, more volatile stocks attract larger haircuts.

Pledging does not transfer ownership of your shares. They remain in your Demat account, marked as pledged. You continue to receive dividends and bonus shares on pledged holdings. However, you cannot sell pledged shares without first unpledging them, which typically takes one working day.

SEBI's 2020 circular on margining and pledging significantly changed the mechanics. Under the revised framework, brokers cannot use client securities for their own purposes - a protection for investors. The client must explicitly create a pledge through the depository's system, and this requires the client's authorisation (typically via a One Time Password or OTP). This makes the process more transparent and secure.

Important caution: pledging your delivery holdings to trade in higher-risk segments introduces a new risk dimension. If your leveraged trades go wrong, your broker may issue a margin call - a demand for additional margin. If you cannot meet the margin call, the broker has the right to sell your pledged shares to recover the dues. This means a mistake in your derivatives or intraday trades can result in the forced sale of your long-term delivery holdings, undermining the investment thesis for those shares. Risk management, therefore, applies not just to individual trades but to the overall portfolio structure.

For investors who want to use pledging, a conservative approach is to pledge only a portion of their holdings and maintain comfortable cash margins as well, so that margin calls can be met without touching the core delivery portfolio.

Corporate Actions and Their Impact on Delivery Holdings

One of the genuine advantages of delivery trading over intraday or derivatives trading is the ability to benefit from corporate actions. When you are a registered shareholder - a status you achieve only through delivery trading - you participate in the economic and governance events that companies undertake. Understanding how each corporate action works helps you make informed decisions and avoid surprises.

DIVIDENDS: Companies that generate surplus profits may choose to distribute a portion to shareholders as dividends. If you hold shares in your Demat account on the record date declared by the company, you are eligible for the dividend. The dividend is paid per share, and the total amount is directly credited to your registered bank account (linked to your Demat account) via electronic transfer. The timing of your purchase relative to the ex-dividend date matters critically - you must buy the shares at least one working day before the ex-date under T+1 settlement to ensure your trade settles and you appear on the record date register. The ex-dividend date is the first day the stock trades without the dividend entitlement - buyers on this date do not receive the declared dividend.

BONUS SHARES: A bonus issue is when a company issues additional shares to existing shareholders in a specific ratio (e.g., a 1:1 bonus means one additional share for every share held) at no cost. This does not change the total value of your holding in theory - the share price adjusts proportionally - but it increases the number of shares you hold. Bonus shares are credited to your Demat account after the record date. Long-term investors often find bonus issues attractive because they increase liquidity in smaller companies and signal management's confidence in the business.

RIGHTS ISSUES: In a rights issue, a company offers existing shareholders the right to buy additional shares at a specified price (usually at a discount to the market price) in a fixed ratio. Rights Entitlements (REs) are credited to your Demat account, and you can choose to apply for the shares, renounce the rights (sell them in the secondary market during the RE trading window), or let them lapse. Rights issues are an important way companies raise capital, and understanding whether to participate requires assessing the company's use of proceeds.

STOCK SPLITS: A stock split reduces the face value of each share by a fixed ratio (e.g., a 2:1 split halves the face value and doubles the number of shares). The total holding value remains the same at the time of split, but the price per share decreases proportionally, potentially improving the stock's accessibility and liquidity for smaller investors.

BUYBACKS: Companies occasionally buy back their own shares from the open market or through a tender offer. If you participate in a buyback tender, you sell your shares back to the company at the buyback price. Buybacks are generally viewed as a signal of management confidence and can enhance shareholder value when done at reasonable prices.

AGM VOTING AND SHAREHOLDER RIGHTS: As a delivery investor, you are a registered shareholder with the right to vote on resolutions at the Annual General Meeting (AGM) or through e-voting platforms. SEBI has made e-voting mandatory and accessible, allowing even small shareholders to exercise their governance rights. This is a dimension of ownership that purely speculative traders in derivatives can never access.

Trackingall these corporate actions requires attention to the exchange announcements on NSE and BSE, which are publicly accessible. Making a habit of reviewing announcements for companies in your delivery portfolio ensures you never miss an entitlement or misunderstand a price adjustment.

Tax Treatment of Delivery Trading in India

Taxes are an unavoidable part of delivery trading and, if ignored during planning, can significantly reduce net returns. India's tax treatment of delivery-based equity trades has evolved considerably, and the current framework (as per the latest Finance Act - always verify with a qualified tax professional or the latest Act) has specific provisions that every investor should understand at a conceptual level.

CAPITAL GAINS CLASSIFICATION: When you sell delivery shares, the resulting profit or loss is a capital gain or capital loss. The classification into short-term or long-term depends on the holding period. For listed equity shares held on recognised Indian exchanges, the holding period threshold for long-term classification is twelve months. Hold for twelve months or less and it is a Short-Term Capital Gain (STCG); hold for more than twelve months and it is a Long-Term Capital Gain (LTCG).

STCG TAX: Short-term capital gains from listed equity shares are taxed at a rate specified under the Income Tax Act. The rate has been revised in recent Budgets, so always refer to the Finance Act applicable to the year in which you sell the shares.

LTCG TAX: Long-term capital gains from listed equity shares are taxed above a specified exemption threshold. The LTCG regime for equity shares was reintroduced in India through the Finance Act 2018, which removed the previous full exemption. The applicable rate and exemption limit are defined in the current Finance Act - consult a tax professional for the most current figures.

SET-OFF AND CARRY-FORWARD OF LOSSES: One of the more valuable features of India's capital gains tax framework is the ability to set off losses against gains. STCG losses can be set off against both STCG and LTCG. LTCG losses can be set off only against LTCG. If you cannot set off a capital loss in the current year (because gains are insufficient), you can carry it forward for up to eight assessment years, subject to filing your Income Tax Return on time.

SPECULATIVE INCOME DISTINCTION: Intraday equity trading (where no delivery is taken) is classified as speculative business income, which is taxed at slab rates and has more restrictive loss set-off rules - speculative losses can only be set off against speculative gains, not against salary or capital gains. Delivery trading, by contrast, generates capital gains, which have separate (and often more favourable) set-off rules.

STT AND TAX: It is worth noting that STT paid on delivery transactions is not separately deductible while computing capital gains (unlike some other costs). The cost of acquisition for capital gains purposes is the actual purchase price of the shares, and STT is not added to it for computing the net gain. However, brokerage is generally included in the cost of acquisition, reducing the taxable capital gain.

INDEXATION: Indexation - the adjustment of the cost of acquisition for inflation using the Cost Inflation Index - has specific applicability rules for equity shares. Under the current framework, indexation benefits are generally not available for LTCG on listed equity shares. Again, verify with the latest Finance Act.

ADVANCE TAX: If your total tax liability (including capital gains) exceeds a specified threshold in a financial year, you are required to pay advance tax in four instalments during the year. Failure to pay advance tax correctly results in interest liability under the Income Tax Act. Delivery investors with active portfolios should estimate their capital gains tax liability during the year and make advance tax payments accordingly.

Filing your Income Tax Return correctly - using the appropriate ITR form that accommodates capital gains - is mandatory if your total income exceeds the basic exemption limit. Maintaining a detailed trade log with purchase dates, purchase prices, sale dates, sale prices, and all transaction costs is strongly recommended to make tax filing accurate and efficient. Your broker's contract notes and annual capital gains statement are essential documents for this purpose.

Example

Key benefits

How it works

1. 1
   Open a Demat and Trading Account

   To begin delivery trading, open a Demat account with a SEBI-registered Depository Participant and a trading account with a SEBI-registered broker. Most brokers offer a combined account; link it to your bank account for seamless fund transfers.

2. 2
   Fund Your Trading Account

   Transfer sufficient funds from your bank account to your trading account to cover the full purchase value of the shares you intend to buy, plus an allowance for transaction costs. Delivery trading does not use leverage - you must have the complete amount available.

3. 3
   Place a CNC Buy Order

   Log in to your broker's platform and select the stock on NSE or BSE. Choose the CNC (Cash and Carry) product type to indicate this is a delivery order. Enter the quantity and your preferred price (limit order) or opt for a market order, then submit.

4. 4
   Order Execution on the Exchange

   Your order is routed to the exchange, where it is matched with a sell order at the same price. Once matched, the trade is confirmed and you receive a contract note from your broker detailing the trade, costs, and obligations.

5. 5
   Settlement on T+1

   On the next working day (T+1), the clearing corporation processes the trade. Funds are debited from your account (or already blocked at order placement), and the shares are credited to your Demat account, completing the settlement under India's T+1 cycle.

6. 6
   Hold and Monitor Your Position

   With shares in your Demat account, you can hold them for as long as your investment thesis remains valid. Track corporate announcements on NSE/BSE, quarterly results, and dividend declarations to stay informed about your holdings.

7. 7
   Sell When You Choose

   When you decide to exit, place a CNC sell order on your broker's platform. After execution and settlement, funds are credited to your trading account, from where you can withdraw to your bank or reinvest. Capital gains tax liability arises at this point.

Formula

Net Capital Gain = (Sale Price × Quantity) − (Purchase Price × Quantity) − Total Transaction Costs (Buy + Sell)
Holding Period = Date of Sale − Date of Purchase (determines STCG or LTCG classification at the 12-month threshold)

Key takeaways

Frequently asked questions

Related terms