What is T2T Stock? How to Identify and Trade It

Have you ever bought a stock thinking you could sell it the same day, only to find out that it wasn’t allowed?

Frustrating, right? That likely happened because the stock was part of the T2T (Trade-to-Trade) segment, where intraday trading is restricted, and delivery-based settlement is mandatory.

Many traders get caught off guard by this. This article explains what T2T stocks are, why stock exchanges classify certain stocks under this category, how they function, and most importantly, how to identify T2T stocks and avoid them before placing a trade. So let’s begin!

What is T2T stock

T2T (trade-to-trade) stocks are stocks that do not allow intraday trading or BTST (Buy Today, Sell Tomorrow) transactions. When you purchase T2T shares, you must take delivery of the shares (T+2 settlement), i.e., they will be credited to your demat account before you can sell them. This means you cannot sell and buy these shares on the same day.

Key Factors Behind T2T Stock Classification

If a stock is put in the Trade-to-Trade (T2T) category, there are some solid reasons behind it. NSE and BSE monitor these stocks based on specific parameters and put them in the T2T list when needed. Let’s look at the key factors that lead to a stock being placed in this category.

Effect of Price-to-Earnings (P/E) Ratio

• If the P/E ratio of a stock is either very low (below 0) or goes above the defined upper limit (minimum 25), then that stock may shift to T2T.

• For example, if the P/E ratio of Nifty is between 15-20, then the upper limit will be 30.

• If the P/E of Nifty goes up to 22, then its upper limit will be 32.

Abnormal Fluctuations in Stock Price

• If the price of a stock changes rapidly, it can go into the T2T segment.

• If the price variation of a stock in the last 15 days is 25% (at least 10%) more than the sectoral index or Nifty 500 index, then it can be put in the T2T category.

• For example, if the sectoral index has fluctuated by 12% and a stock has a change of 38% (12% + 25%), then that stock can come in the T2T list.

Focus on Stocks With a Small Market Cap

• The stock exchange mainly keeps an eye on stocks with a market cap of 500 crore or less. If the market cap of a stock is low and the trading volume suddenly increases, then it can be put in the T2T list.

Trade With the Understanding of T2T Rules

• The exchange continuously monitors the stocks that move to the T2T category. If the stock stabilizes and the volume becomes normal, it can also be shifted back to the regular category. Therefore, investors should keep a long-term perspective while trading in this segment.

How to Identify T2T Stocks 

To avoid unexpected trading restrictions, always check whether a stock falls under the T2T (Trade-to-Trade) category before buying. The NSE and BSE regularly update the list of T2T stocks. You can check the status of a stock by visiting the NSE 'Securities Available for Trading' page and the BSE 'List of Securities' page, where the complete list of T2T stocks is available. For checking individual stock, follow the steps mentioned below:

Steps to Check T2T Stock on NSE:

Step 1: Go to the NSE India website.

Step 2: Use the search bar at the top and enter the stock name.

Step 3: Click on the stock, and check its series as shown in the image below.

Step 4: If it is a T2T stock, it will be listed under the "BE" series (Book Entry).

Steps to Check T2T Stock on BSE:

Step 1: Visit the BSE India website. 

Step 2:  Use the search bar at the top and enter the stock name.

Step 3: Click on the stock, and check its Group / Settlement Type

Step 4: Look under the " Group / Settlement Type" section. If it is marked as "T", it belongs to the T2T category.

Steps to Identify T2T Stocks in the Rupeezy App

In the Rupeezy trading app, you can easily check if a stock is in the T2T category before placing a trade. Here’s how :

Step 1: Just go to the Watchlist and search for the stock you want to trade.

Step 2: Tap on the stock name to see its details. 

Step 3: If the label of the type of stock shows BE (Book Entry) or T, that means that you are not allowed to do intraday trading.

How to Trade in T2T Stocks

Trading in T2T stocks is different from regular stocks because you cannot do intraday trading here. This means that there can not be quick buys and sells in a single day; every trade must be delivery-based.

When you buy stocks of the T2T segment, you must hold them in your demat account for at least T+2 days (where T = day of transaction). You can sell the shares only after they are credited to your demat account.

How to Buy T2T Stocks on Rupeezy

Buying T2T (Trade-to-Trade) shares is the same as buying regular shares, but you need to be aware of their trading limits. Here are the steps to buy T2T shares:

Step 1: Open your Rupeezy trading app and go to the watchlist.

Step 2: Find the share you want to buy.

Step 3: Click on the Buy button if it is a T2T share; you’ll be shown a warning message and disclaimer.

Step 4: If you accept the terms, select “Yes” to finalise your order. Alternatively, if you don’t accept the terms, click “No” to cancel.

Step 5: Once you buy, you will need to wait for the T+2 settlement period before you can sell.

How to Sell T2T Stocks

Selling T2T (Trade-to-Trade) stocks is not as instant as regular stocks because you must wait for the T+2 settlement period before you can sell. Here are the requirements and steps to sell T2T shares:

• T2T stock must be held for at least two trading days.

• T (transaction day): The day you buy the shares.

• T+1 (next trading day): The exchange processes the trade.

• T+2 (second trading day): The shares are finally credited to your demat account. Now, you can sell!

Step 1: Open the Rupeezy app and go to your Portfolio section.

Step 2: In the Portfolio page, go to the Holdings segment.

Step 3: Find and select the stock you wish to sell.

Step 4: If your shares have completed T+2 settlement, click on the Sell button.

Step 5: Enter the quantity you wish to sell and confirm your order.

Step 6: Once the sale is complete, the money will be credited to your account after the standard settlement period.

Why Check Stock Category Before Trading?

• Avoid getting trapped - Many traders unknowingly buy T2T stocks and hope to exit the same day, but later they realize that they cannot sell immediately.

• No leverage or margin - Unlike regular stocks, you cannot buy T2T stocks using MTF (Margin Trading Facility). You must have the full amount in your account.

• Less manipulation - T2T stocks are protected from excessive speculation, which makes them safe for serious investors.

Differences Between T2T and Regular Stocks

Key Risks of Trading T2T Stocks

Investing in T2T stock is not a game of buy today, sell today. There are certain risks you should be aware of before you invest. Let's get this out of your mind.

• Low liquidity: T2T stock does not have a market of buyers and sellers that is as large as regular stock. Let's say you are selling a product, but not many people are interested in buying it - it takes some time, right? Liquidity is exactly like this. If there are not enough buyers for a stock when it is time to sell it, you may end up holding it for longer than you expect.

• Price Volatility: Since fewer people trade T2T stock, even small buy or sell orders can cause large price fluctuations. One day, the stock is up 5%, and the next day, it's down 5% - talk about a rollercoaster ride! This makes T2T stock a bit unpredictable, so you should invest with caution.

• Holding Period Restrictions: The biggest rule in T2T stocks? No intraday trading! You have to take delivery of the stock and wait till T+2 days before selling. If you were planning to make a quick profit by selling the same day, well… not happening here! You have to wait for the settlement before making your next move.

Who Should Invest in T2T Stocks

T2T stocks come with strict delivery requirements and limited liquidity, which makes them unsuitable for certain types of traders, but they can be appealing to a specific category of investors. Here's who should consider investing in T2T stocks:

1) Long-term Investors:

T2T stocks are ideal for investors with a long-term horizon who are comfortable buying and holding stocks. Since intraday trading isn't allowed, these stocks work best for those who prefer to wait and benefit from potential long-term growth.

2) Value Investors:

Some T2T stocks may be undervalued or temporarily beaten down, attracting value investors who believe in the underlying fundamentals of the company and are willing to wait for a turnaround.

3) Risk-tolerant Investors:

Due to their lower liquidity and higher volatility, T2T stocks carry more risk. Investors who understand these risks and are willing to endure short-term price swings may find opportunities for outsized gains.

Is It a Good Idea to Buy T2T Stocks

T2T stocks may be worth considering when there is confidence in a company’s long-term fundamentals. In some cases, fundamentally strong companies face temporary market pressure, which can create opportunities to invest at undervalued prices. The mandatory delivery rule discourages speculative trading, often resulting in more stable investor participation.

That said, investing in T2T stocks also comes with challenges. The lack of intraday trading limits flexibility, and reduced liquidity can make it difficult to exit positions quickly. Moreover, a stock’s inclusion in the T2T segment may reflect concerns such as high price volatility or weak financial performance, which must be carefully evaluated before investing.

Therefore, T2T stocks may suit long-term investors willing to conduct thorough research. For short-term traders, however, they may not be the right fit. A careful assessment of the company and its T2T classification is essential before investing.

Conclusion

T2T stocks are for intelligent and long-term investors who follow delivery-based trading rules. Unlike normal stocks, you cannot sell and buy them on the same day, but there will be less manipulation and more stability.

Always see if a share is a T2T share before investing by checking NSE, BSE or Rupeezy app. This will prevent surprises while trading.

If you enjoy rapid trades and rapid profits, T2T stocks are not the ideal choice for you. But if you are the type who likes to hold stocks for long-term appreciation, they can be a secure and stable choice for your portfolio.