Settlement Holiday in Stock Market: Meaning

Settlement Holiday is when the stock market is open, but shares which you bought or sold are not settled.

This could be due to bank holidays or because the depositories (CDSL and NDSL) are closed.

Let’s take an example.

18th February 2021: You buy 10 shares of Reliance Industries.

When you purchase shares, you buy it from someone who has sold it. So the shares have to be transferred from their dematerialized (demat) account to yours.

This process takes two working days. In other words, it takes two working days for the Reliance shares to transfer from their demat account to yours.

The day after you buy the shares, Reliance Industries will be shown as T+1. This means, ‘Trading Day + 1’ i.e. the first day after you bought the shares.

On the 2nd day, which is T+2, the shares are deposited into your demat account – after which, you can sell your shares.

However, if there is a ‘settlement holiday’ in between, then it takes one extra working day for the shares to get deposited in your demat account.

Getting back to our example:

• 18th February (Thursday): You buy 10 shares of Reliance Industries.
• 19th February (Friday): Settlement holiday due to ‘Chhatrapati Shivaji Maharaj Jayanti’.
• 20th February (Saturday): Holiday
• 21st February (Sunday): Holiday
• 22nd February (Monday): T+1
• 23rd February (Tuesday): T+2 Reliance shares deposited in your account.

In short, if 19th Feb was not a settlement holiday, you would have received the shares in your demat account by 22nd February.

Saturday and Sunday are always settlement holidays.

List of Settlement Holidays in 2021