What are T2T stocks? How to identify and trade in them?

T2T stocks, also known as trade-to-trade stocks are a type of securities that can be traded on a delivery basis only. This slows down the instantaneous buying and selling of shares in the stock market.

In this blog, we will discuss what a trade-to-trade stock means, its features, and how to identify these stocks in the share market.

What Do You Mean by T2T Stocks?

T2T stocks in the share market are some specific stocks that the share market allows to be traded on a delivery basis only. That means if you buy a trade-to-trade share, you have to take delivery of it to complete the trade, and if you are selling it, you have to deliver it from your demat account to complete the trade.

This eliminates the possibility of Intraday and BTST (Buy Today, Sell Tomorrow) trades. The stock market puts normal shares that are generally highly volatile into the T2T trade segment to prevent manipulation and excessive speculation in their prices.

They make exclusions and inclusions of shares in this segment based on the P/E ratio, price variation and market capitalisation of shares in collaboration with SEBI. 

How Can You Identify T2T Stocks in the Share Market?

Both stock exchanges (i.e., NSE and BSE) publish a list of stocks in the T2T segment on their official websites. However, you can identify these shares by looking at their script names.

• BSE: BSE adds the letter “T” at the end of the share’s script name. Suppose BSE puts the Mangalore refinery in the T2T segment, it will be named “500109 T”. As the Mangalore refinery’s script name in BSE is “500109”.
• NSE: NSE adds “BE” at the end of the share’s script name, which it puts into the T2T segment. For instance, if NSE puts Mangalore Refinery in the T2T segment, then its script name will be “MRPL BE,” as its script name in NSE is “MRPL.”

Concept of T2T Trade with Examples

Let’s understand the concept of T2T trade with an imaginary example.

Suppose you want to invest in T2T stocks as marked by the stock exchange. Now, you feel like the stock’s price will rise, so you buy 50 shares.

Since the Indian stock market takes T+1 days for a trade settlement, the shares you bought will be credited to your demat account at the end of the next working day.

Now, since your investment is in T2T stocks, it is traded on a delivery basis only. Hence, if you want to sell these shares, you must wait for T+1 day to sell them when their delivery arrives at your demat account.

If you try to sell T2T stocks before the order is delivered to your demat account, it will be rejected immediately.

Things To Consider Before Investing in T2T Stocks

Now, we know what T2T stocks mean, but knowing their features, we must keep some things in mind before investing in these shares. Here is a list of those,

• Invest Strategically: T2T stocks are generally highly volatile and the T2T trading feature holds you from selling them before you receive their delivery order in your demat account. This generates a risk of loss for you within T+1 day.
• Impossible to Trade Intraday or Make BTST Trades: The T2T trading does not allow you to make intraday or BTST trades. You must predict the share’s rise or fall for at least the next two days.

Final Thoughts

The stock market uses this technique to prevent excessive manipulation and speculation of the price rates of these T2T stocks that are highly volatile. They do this for the trader’s own interest by bringing stability to the market. The NSE and BSE do this in collaboration with SEBI. One can use the combination of stability in a volatile share to make profits for oneself. 

Torus Digital provides 3 in 1 account, savings account and trading account. You can use this account to freely invest in T2T stocks.