An investor submits an online purchase application for a Liquid Fund at 11:00 AM on Wednesday (a business day), and the funds are credited and available for utilization in the scheme's account at 12:30 PM on the same day. Which day's closing NAV is applicable?

[ A ]Closing NAV of Wednesday (the day of application)

[ B ]Closing NAV of Thursday (the day after application)

[ C ]Closing NAV of Tuesday (the day immediately preceding the day of receipt of application/realization)[ CORRECT ]

[ D ]Closing NAV of the following Sunday

Takeaway

Option C is correct: Closing NAV of Tuesday (the day immediately preceding the day of receipt of application/realization)

Derivation

For Liquid and Overnight funds, the purchase cut-off time is 1:30 PM. If the application is received before 1:30 PM and funds are available for utilization before 1:30 PM on that business day, the applicable NAV is the closing NAV of the day immediately preceding the day of receipt of application (i.e., Tuesday's closing NAV). Liquid funds calculate NAV for all 365 calendar days. This tests specific liquid fund purchase cut-off rules. The common error is assuming same-day (Wednesday) NAV applies as in equity funds.

Why the others fail

A — Closing NAV of Wednesday (the day of application)

Wednesday's NAV would apply only if funds were realized after the 1:30 PM cut-off time on Wednesday.

B — Closing NAV of Thursday (the day after application)

Thursday's NAV would apply only if funds were delayed and not realized in the scheme account until Thursday after cut-off time.

D — Closing NAV of the following Sunday

Sunday's NAV is not applicable to an ordinary midweek Wednesday morning transaction with same-day clearance.