Can I sell a stock and use the sale proceeds for buying another stock on the same day?

No, you cannot sell a stock from demat account and use the sale proceeds for further trading on the same day. This is because, before you buy a stock, it is mandatory to allocate your free cash balance to the Clearing Member which is called allocation. As you have sold the stocks today, we will have to provide pay-in of shares sold to the Exchange and the Exchange will release funds payout on the next day (T+1). Till such time, there will be no clear balance in your ledger to be allocated to Clearing Corporation. Hence, to avoid penalties, we do not allow you to buy a stock based on the sales you have made today.

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