Traders who are planning to invest in the stock market, or expecting their trading settlement in equities next week, will have to keep a note of these holidays. Stock exchanges will have a trading holiday on August 15 due to the Independence Day celebration. This means that trading in the equity market will not be allowed on Monday. Notably, while the market will be open on Tuesday for trading, however, the depositories will be closed on this day on account of Parsi New Year.
The market has entered into a long weekend from Saturday to Monday, and the trading will resume on Tuesday.
But, there is a settlement holiday on August 16 due to Parsi New Year. One should know that settlement holidays and trading holidays are different.
Trading in equities is done on stock exchanges namely BSE and NSE. While there are two depositories namely NSDL (National Securities Depository Limited) and the CDSL (Central Depository Securities Limited).
A settlement holiday delays the execution of a transaction in stocks by one day.
When an investor buys or sells shares, bonds, exchange-traded funds, mutual funds, and others — two important dates need to be kept in mind. These are the transaction date and settlement date. There are T+ Settlement Day which can be T+1 and T+2. The letter ‘T’ stands for ‘trading day’ or ‘transaction date’ which means the day the market-related instruments were bought or sold.
So for instance, if you bought shares on Monday, this becomes your ‘trading date’. Under the T+1 option, the shares you bought will get credited to your Demat account on Tuesday. Meanwhile, under the T+2 option, the shares you bought will get credited to your Demat account after two days, i.e. Wednesday. The case is similar to selling shares, but the credit will be done in your bank account linked with the Demat account.
However, since there is a settlement holiday on August 16. This means, that shares bought or sold on Monday will reflect in your Demat or bank account on Wednesday for the T+1 option and on Thursday for the T+2 option.
Also, the trading done on August 12, will have the settlement day on Wednesday under the T+2 option.
Generally, settlement holidays occur due to bank holidays but there can be other reasons as well to why depositories are closed. Saturdays and Sundays are settlement holidays by default. Also, settlement holidays include BSE and NSE holidays, and all other market-related holidays.
There are in total 16 settlement holidays in India in the current year. 10 settlement holidays have already passed. Including the August 16 holiday, there are now only six settlement holidays left in the country.
The next settlement holiday will be on August 31 due to the Ganesh Chaturthi festival. Meanwhile, three settlement holidays await in October on the 5th due to Dussehra, on the 24th due to Diwali Laxmi Pujan, and on 26th as part of Diwali Balipratipada. The last settlement holiday for 2022 will be on November 8 on account of Gurunanak Jayanti.
Trading holidays on BSE and NSE will also be on August 31st, October 5th, 24th, and 26th, and lastly on November 8th.
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