How does badla work?
Lets take an example. Tarun buys ITC stocks at Rs 150 on Monday, the first day of the new trading cycle. By Friday, which is the settlement day on BSE and the end of that particular trading cycle, if Rs 160 were the closing price of the stock, Tarun would have to carry-forward his trade at this price of Rs 160. Therefore, Tarun will get a credit of Rs.10 per share in his account. For the following week, Taruns cost of the share (or referred as the contracted price) would be Rs.160 plus badla charges. Similarly, if the closing price had been Rs 140, Tarun would have been debited Rs.10 and the contracted price would be Rs.140 plus badla charges. He could therefore, carry forward for the next settlement without selling off the shares.
