What are T2T Stocks?
29 March, 2025
Synopsis
T2T stocks are those stocks in which delivery is to be compulsorily taken by the buyer.
Intraday trading is not allowed in these stocks.
Stocks that are seeing very high speculation or that may be seeing price manipulation are usually put in this category.
The Securities Exchange Board of India (SEBI) regulates trading activities in the stock market and has various rules in place to protect your interests as an investor. One such rule pertains to Trade 2 Trade Stocks. With T2T, SEBI advocates a more cautious approach to trading by disallowing intraday trades. It helps you curb speculative activities and employ disciplined trading practices. Learn what Trade to Trade Stock Trading is and how it works in this blog.
What are T2T Stocks?
T2T stocks or Trade-to-Trade Stocks means the kind of stocks placed in a special segment to restrict speculative trading. The stock exchanges in India – National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) place some equities in the T2T segment to fulfil this purpose. In this segment, compulsory delivery is required for the buying and selling transactions. This means you must wait for the stock to be delivered in T+2 settlement days. Hence, you can't sell it on the same day, which prevents you from Intraday Trading.
Identifying Trade-to-Trade Stocks
Not all stocks are placed in the T2T segment. Stock exchanges determine which securities belong in this category on specific criteria such as price volatility, trading patterns, or the need to safeguard your interests as an investor. Here's how you can identify T2T stocks:
High Price Volatility: Mostly, stocks experiencing erratic price changes are moved to the T2T segment.
Suspicious Trading Patterns: If there is extraordinarily spiked trading activity, you can suspect those stocks to get moved to the T2T segment.
Strictly Delivery-Based: All stocks in the T2T segment are delivery-based. This is the primary rule that makes them unsellable on the same day.
Regulatory Compliance: You can check which stocks are under regulatory scrutiny for compliance and governance issues. They are most likely shifted to the T2T segment.
Requirements to Shift the Stocks in the Trade-to-Trade Segment
Stock exchanges follow a systematic process and consider the following criteria to shift the stocks in the Trade-to-Trade segment:
Very high P/E ratio
A stock trading at a very high P/E ratio, that does not seem to be justified by its fundamentals, may be considered for the T2T category.
Market Capitalization
Another requirement is market capitalisation. A stock may be put into the T2T segment when its market cap falls below ₹500 crore. Such a shift may prevent manipulation in prices of smaller stocks. It is worth noting that Initial Public Offerings (IPOs) are exempted from such rules and are not considered under T2T regulations.
Price Volatility
A stock showing excessively high price volatility may be put in the T2T category.
A stock satisfying all three conditions is considered for Trade-to-Trade.
How to Trade in T2T Stocks?
Clearly understanding the rules and having a disciplined approach is important to trade in Trade 2 Trade stocks. Here's how you can do it right:
Understand the Delivery Requirements
As discussed, all transactions in T2T stocks have a compulsion to result in a delivery. Hence, ensure to have funds or shares in your Demat Account before you place your trades.
Avoid Intraday Trading
The whole point of T2T stocks is to prevent intraday trading. You cannot do intraday trading in these stocks.
Analyse Stock Fundamentals
Since there are no quick trades, you can use the opportunity to read carefully. Take the time to analyse stocks. Look into the company's fundamentals, financial health, and growth potential before trading.
Monitor Stock Movements
Closely track the price trends and announcements. Some stocks can still be volatile despite the restrictions. Hence monitoring helps you make better trading decisions.
Trade in T2T Stocks Confidently with HDFC Bank Demat Account
T2T stocks are designed to promote a disciplined approach to trading by restricting speculative activities and preventing intraday trades. Once you understand the rules and fundamentals of these types of stocks, you can make thoughtful, long-term investment decisions. A reliable Demat Account will assist you in making such trading decisions with ease. This is where HDFC Bank Demat & Trading Account fits the bill with its reliable and on-the-go convenience!
FAQs
Why am I not able to sell T2T shares?
T2T shares can only be sold after they are delivered to your Demat account. You can sell it the next day after taking the delivery.
How to identify T2T stock?
You can identify T2T stocks through stock exchange notifications or by checking the trading segment classification on trading platforms.
Open Demat Account online
*Disclaimer: Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.
