What is settlement in the stock market?

Settlement is the process by which a completed trade actually gets finalised: shares move from the seller’s demat account to the buyer’s, and funds move from the buyer to the seller, through the exchange’s clearing corporation acting as an intermediary that guarantees the transaction. Trade execution (when your order matches on the exchange) and settlement (when shares and funds actually change hands) are two separate steps, and there’s a gap between them. Indian equity markets currently follow a T+1 settlement cycle, meaning a trade executed on a given trading day settles the next business day. Until settlement completes, shares you’ve bought aren’t fully in your demat account yet, and proceeds from shares you’ve sold aren’t fully withdrawable, even though the trade itself is done and confirmed on the exchange.