Muharram 2021 - Stock Market Holiday

The stock markets will remain closed on 19-08-2021 on account of Muharram. It will be a trading holiday as well as a banking / clearing holiday on Thursday. As a result, this time the weekly index options settlement in F&O has been pulled back from Thursday to Wednesday. For more details you can check BSE Holidays 2021 or NSE Holidays 2021.

Muharram marks the first month of the Islamic calendar and the month of Muharram is considered as the second holiest month for Muslims after Ramadan. The Muharram festival marks the 10th day of this month, called Ashura, when Shia Muslims mourn the sacrifice of Hussain Ibn Ali’s family while Sunni Muslims practice fasting on this day. In India, Muharram is a banking and stock market holiday.

Since the stock markets will be shut on the occasion of Muharram on 19th August, there will be no trading in equities, futures or in options. Hence, there will obviously not be any settlement of trades on Thursday. However, since banking operations will also be shut on 19 August, it will impact the settlement cycle. Let us look at how the trade cycle and the funds settlement cycle will be impacted. 

Since Thursday will be a trading holiday, the cash and F&O settlements will shift accordingly. In the case of F&O transactions, the transactions up to Tuesday would have already been settled on Wednesday. However, the F&O trades of Wednesday will now be settled on Friday 20th August, instead of on 19th August. 

Similarly, the T+2 cash market trades of Tuesday will get settled on Friday instead of Thursday while the T+2 trades of Wednesday will get settled on the next week Monday, instead of on Friday. This will be the change in the settlement cycles. But how will the Demat and bank transfers be impacted by the Muharram holiday on BSE and NSE?

In the case of shares sold on Tuesday, the Demat debit would have happened on Wednesday itself. However, the bank credit will happen only on Friday, since Thursday is a trading cum banking holiday. In the case of shares sold on Wednesday, the Demat debit would happen on Friday instead of Thursday. However, the bank credit will happen only on the next Monday, since Thursday is a holiday for trading and for banking also. What about shares bought?

Also Read: How are stocks settled after a trading holiday

In the case of shares bought on Tuesday, the bank debit would have happened on Wednesday itself. However, the demat credit of shares will only happen on Friday, since Thursday is a trading cum banking holiday. In the case of shares bought on Wednesday, the bank account debit would happen on Friday instead of Thursday. However, the Demat credit of shares will happen only on the next Monday.

India is a land of diverse cultures and religions and hence the holiday pattern tries to accommodate all festivals in a secular manner. In year 2021, there are a total of 18 trading holidays, of which 13 fall on weekdays and 5 trading holidays fall on Saturdays or Sundays. On the other hand, there are a total of 20 banking holidays that fall on working days and clearing and settlement on NSE and BSE will remain shut on these days.

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Find the entire list of NSE/BSE Holidays 2021, Commodity Market Holidays