Introduction:
Trading refers to buying and selling securities on the stock market. It doesn’t necessarily have to be a long-term process; it can be short-term, too. For instance, a trader can buy and sell shares within the same day. This type of trading is known as intraday trading. According to intraday trading, a net position of zero is maintained at the end of any given day.
A common question most have about intraday trading is, “When will the intraday profits be credited?” Keep reading to discover the answer to this question and understand how intraday profits are credited.
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SEBI’s New Rule:
Initially, intraday profits were immediately credited by most brokers and firms. However, from March 1, 2021, intraday profits are only credited to the trader’s account on the subsequent working day. The Securities and Exchange Board of India (SEBI) brought this rule into force. According to SEBI’s new rule, any profits generated from intraday trading will be credited to the trader's account on the subsequent working day when the market closes for business. So, even if there are any profits, a trader cannot access them on the same day as the transactions carried out. Instead, they will have to wait until the market closes, 3:30 PM on the following day.
There are two exceptions to this: the first is if the transaction day happens to be a Friday, and the second is if the day following the transaction day is a market holiday. In both these instances, intraday profits will be credited to the trader’s online account on the following working day at 3:30 PM when the market closes for the day.
Intraday Profit Crediting
The simplest way to understand how and when intraday profits are credited is through an example. Let’s assume a trader executed three intraday trades on December 10, which will henceforth be referred to as T (transaction) day. The transactions are as follows.
The three trades are:
- Buy 20 shares worth ₹1000 each, amounting to ₹20,000.
- Buy 16 shares worth ₹1200 each, amounting to ₹19,200.
- Sell 36 shares worth ₹1300 each, amounting to ₹46,800.
These three transactions will result in a profit of ₹7,600.
Now, let’s see how this transaction will be cleared.
Scenario 1: T Day is a Weekday
According to SEBI’s guidelines, the trader will receive the profit on the following working day (T+1 day). If December 10 is a weekday, then the T+1 Day will be December 11, provided it is a working day. In such a situation, the trader can access the profit once it is credited after the market closes at 3:30 PM.
Scenario 2: T Day is a Friday
The trader should ideally receive their profits on the T+1 day. However, the profits will not be credited on a Saturday if the T Day is a Friday. In this instance, if December 11 is a Friday, then the trader must wait until 3:30 PM Monday, December 14, to receive the intraday profit. The trader will not receive the profits on December 12, a Saturday.
Scenario 3: Market Holiday
If the T+1 day is a market holiday, profits will be credited to the trader’s online account at 3:30 PM on the subsequent working day.
Usually, there are no delays in intraday profits being credited. However, in some situations, due to market volatility, brokerage policies, speed of trade execution, and processing times, there can be a delay. Another factor that can affect the crediting of intraday profits is the trading segment. The timeframes vary depending on whether intraday trading was conducted in the equity, commodities, derivatives, or any other segment. To check if intraday profits are credited, go through your brokerage account’s statement. You can also check the same through the transaction history on your online trading platform.
Conclusion
SEBI’s new guidelines regarding intraday trading were established to reduce speculative trading and promote market stability. It might take investors a while to understand how the settlement process works, but it is in their long-term interest. The simplest way to get the hang of this is to understand the market’s workings, and you can determine when the intraday profits will be credited to your account.
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