Equity delivery based trading in India follows T+1 settlement cycle.
T+1 settlement cycle
For shares bought on Monday (T day), clients get the shares on Tuesday (T + 1 day). Similarly, if shares are sold on Monday (T day), clients are required to give Delivery of the shares on T+1 day after which he/she gets the proceeds from the sale (cash) to withdraw on (T+1 day).
As mentioned earlier, if a client sells any stock on T day, he/she is obligated to authorise the transaction on the CDSL portal using TPIN. If the client fails to authorise the transaction, shares won't get transferred to the Exchange from the client's Demat account.
Hence, clients would not be able to give delivery of these stocks on T+1 and would end up defaulting. This default is called “Short Delivery“.
Example:
The exchange ensures that if you buy shares, you get credit for the shares. Now, assume Client A bought 10 shares of Titan from Client B and Client B doesn’t authorie these shares on CDSL, then the Exchange will treat this as an ‘Short Delivery’ on T+1 day.