Why Shares are Different Than Holdings?

If you have just started off with trading in the stock markets, it is crucial that you understand the meaning and importance of holdings. Knowing the difference between shares and holdings will help you take better charge of and plan any buy/sell transactions without any issues. Here, we will explain the difference between shares that are ‘available to sell’ and holdings for traders and investors to gain a better knowledge of trading.

Let us start by understanding the concept of holdings.

What are holdings?

Holdings are the shares or stocks that an individual’s investment portfolio holds. Since we are talking about stock markets, holdings in this context will mean what is present in one’s Demat account. 

For example, an investor’s holdings shown in their demat account will reflect the types of units held by the investor and that are available for trading on a given trading day. This will, however, not show the actual profits or losses from the given stocks or securities that are held.

How to differentiate shares for sale and holdings?

At the time of placing a sell order during trading hours, stock market investors may see in their Demat account that the shares ‘available to sell’ are not the same as their holdings. This can be mainly due to the below-mentioned reasons:

Tag	How to interpret
Open sell order on NSE/BSE	A sell order has been on NSE/BSE and the same may still be open, which means not yet executed. Account holders cannot duplicate this order since it is in progress.
Bought today on NSE	Stocks that have been bought on a particular day on NSE cannot be sold on BSE on the same day. The same can be sold from the next day onwards.
Bought today on BSE	Stocks bought on BSE on a given day cannot be sold on NSE on the same day. This can be done only from the next day.
Bought Today-T2T Stock*	If an investor tries to sell such stocks, it is called a trade to trade (T2T) stock. Such stocks bought today cannot be sold on the same day. The same can be sold after being delivered to the investor’s demat as per T+2 settlement.
Demat Delivery Pending – T2T Stock	A stock that is being attempted to be sold is a trade to trade (T2T) stock. It can only be sold after being delivered to the investor’s demat account.
Pledged for Margin	If an investor pledges his/her shares (for availing extra margin against the same), these cannot be sold until the investor unpledges them.
Under Lock-in	Such shares may have been locked as per certain regulations. Such shares can be sold only after the lock-in period has ended or has been lifted. Investors must check any announcements from the issuing company for lock-in period information.

What is the difference between portfolio and holdings?

The holdings of an investor shows a count of shares held of a given company. However, such quantity can be resulting from:

1. purchases
2. sales
3. any other movement of stock units, including corporate actions, DP transfers, etc.

Brokers or brokerage platforms simply run a total of holdings since it requires simple addition or subtraction of quantities as stocks enter or leave the investor’s DP account. However, for calculating profits and losses, each movement has to be first priced.

Such priced transactions are reflected by brokers in the form of an investor portfolio. There may also be specific transactions that cannot use automatic pricing and displaying just the price against Holdings can result in errors in P&L. 

Portfolio does not consider the movements of securities that may be in the form of pledges and lock-ins. This is because, from a quantity perspective, the units continue to belong to the investor. When looking at holdings, however, these units are given special treatments and are generally not available under this category.

When should you check your Demat account holding statement?

As per the regulations set by SEBI, every stock purchase or sale done on a given trading day is reflected in an investor’s Demat account as per T+2 settlement. So, if an investor purchases a stock, the transfer for the same is reflected in his/her account after two working days. 

Investors must know the following steps of the transfer:

1. a purchase order goes through the trading account
2. the broker receives the shares directly in its pool account from the stock exchange
3. the funds must then be cleared by the investor’s banking account
4. the broker then transfers the shares in the investor’s Demat account as per stipulated timeline

Upon successful share transfer, the same is reflected in the investor’s Demat holding statement.

Why is it important to monitor Demat holding statement?

It is very important for investors and traders to regularly monitor their Demat holding statement to check whether the requisite share transfer has been made. 

Although in most cases, the transfer is done as per routine transaction flow, there can be chances of an error occurring. It is possible that the shares are retained in the broker’s common pool account and being utilized to meet other client’s margin requirements. In such cases, the investor can face a threat of losses from his/her investment and may also lose corporate action benefits, including dividends, stock splits, etc.

Conclusion

If you are looking to invest in the stock markets, you should look for a broking platform that regularly emails your demat account holding statement apart from providing SMS alerts of all transactions. This will allow easy access to your holdings information and you can easily differentiate between shares and holdings for well-planned transactions.

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