How to do BTST on Zerodha

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BTST (Buy Today Sell Tomorrow) is an equity trading strategy on the Indian stock exchanges where you buy shares in the cash segment on one day and sell them the next day, before the shares have formally settled into your demat account. On Zerodha Kite, BTST is executed using the standard CNC (Cash and Carry) product code for both legs, and the settlement risk is managed by the exchange’s clearing corporation. This guide explains the procedure and the key risk unique to BTST: short delivery. The BTST reference article covers the conceptual background; this guide is the step-by-step how-to.

BTST mechanics under T+1 settlement

India moved to T+1 rolling settlement for equity shares on NSE and BSE in a phased manner starting January 2022, with completion for all listed securities by January 2023. Under T+1:

  • Shares bought on Day T are credited to the buyer’s demat account at the end of Day T+1.
  • The seller must deliver shares to the clearing corporation by Day T+1.

BTST trades occur in this gap: you buy on Day T and sell on Day T+1 before your demat account has been credited. The clearing corporation nets the two transactions: you need to deliver shares on T+2 (for your T+1 sell), but you should also receive shares from your T buy on T+1, so the net delivery obligation to the clearing corporation may be zero or reduced.

Under the earlier T+2 settlement, BTST allowed three-day windows. Under T+1, the BTST window is tighter: buy on Day T, sell on Day T+1 only.

Step-by-step procedure

Buy shares using CNC

On Day T, during regular NSE/BSE market hours (9:15 AM to 3:30 PM IST), buy the shares you want to BTST. Use the CNC product code in the Kite order ticket. Refer to How to place your first equity buy order on Kite for the full order placement procedure. Confirm the buy order is Complete in the Order book.

Monitor the position overnight

After market close on Day T, navigate to Portfolio > Positions in Kite. The bought shares appear as a CNC position with a label such as T1 or in grey text indicating they are pending settlement. In the Holdings section, Kite may show the shares separately, often labelled as T1 holdings.

You do not need to do anything overnight. The shares are contractually yours; they simply have not yet been credited to your demat account.

Place a sell order on Day T+1

On Day T+1, during regular market hours, navigate to Portfolio > Holdings in Kite. The T1 holdings appear (sometimes with a slightly different visual treatment than settled holdings). You can place a sell order directly from the Holdings screen by hovering over the T1 holding and clicking Sell, or by opening a sell order ticket for the scrip via the marketwatch.

Use the CNC product code for the sell. Choose your order type (LIMIT if you have a target price, MARKET if you need immediate execution). Enter the quantity and submit.

Confirm the trade

The sell order executes as a normal delivery sell. It appears in the Trade book with a Complete status. The net P&L from the two legs (buy on T, sell on T+1) is your BTST profit or loss, before brokerage and taxes.

Check for short delivery notifications

Short delivery occurs if the seller from your Day T buy fails to deliver shares to the clearing corporation by T+1. This is outside your control. In a short delivery scenario:

  1. NSE or BSE conducts a close-out auction for the undelivered quantity on T+2.
  2. The shares are bought in the auction at the auction price, which is the higher of 20% above the closing price on T+1 or the highest price from the settlement period.
  3. The original defaulting seller is penalised. If you have already sold the shares on T+1 (BTST sell), you are the affected party whose T+1 sell may not be deliverable. Zerodha will notify you and handle the process.

Short delivery is rare for liquid, large-cap stocks but can occur in illiquid stocks. For BTST trades, prefer liquid NSE large-cap stocks to minimise this risk.

Charges applicable to BTST

Securities Transaction Tax (STT):

  • The buy on Day T: delivery STT at 0.1% of the buy value.
  • The sell on Day T+1: delivery STT at 0.1% of the sell value (it is a delivery sell, not intraday).

Both legs attract delivery STT. This is the primary cost difference between BTST and a true intraday trade (where sell STT is 0.025%).

DP charges (Depository Participant): Zerodha charges a flat Rs 13.5 + GST per scrip per day for any delivery sell from your demat account. For BTST, the T+1 sell leg debits the DP charge. This applies to settled holdings; for T1 holdings that have not yet credited to the demat, the DP charge applicability depends on the internal settlement routing.

Brokerage: Zerodha charges zero brokerage on equity delivery trades for both legs. F&O and intraday trades carry a brokerage cap of Rs 20 per order. Since both BTST legs are CNC (delivery), brokerage is zero.

What can go wrong

  • Short delivery. As explained above, the original seller on Day T may default. The risk is higher for illiquid or thinly traded scrips.
  • Circuit limits on Day T+1. If the stock hits a lower circuit on T+1, you cannot exit the BTST position on T+1 and must wait until circuit limits normalise or settle as a full delivery (shares credit to your demat after T+1 settlement of the buy leg).
  • T1 shares not visible for selling. Interface limitations in some Kite versions mean T1 holdings are not always easily sellable. Contact Zerodha support if this occurs.
  • Margin usage. The buy on Day T requires full CNC funds (no leverage). Ensure funds are available in the account before placing the buy order.

References

  1. Zerodha Support, BTST, Buy Today Sell Tomorrow, support.zerodha.com.
  2. NSE India, T+1 settlement rollout circular, NSE/CMPT/43925, nseindia.com.
  3. SEBI, T+1 settlement framework, circular, SEBI/HO/MRD2/DCAP/CIR/P/2021/606, sebi.gov.in.
  4. BSE India, Settlement of T+1 trades, procedure for members, bseindia.com.

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