MIS order hits its circuit

What if MIS order touches its Circuit limit and I dont square off the order (I cant, As trading for that session has been suspended) then at what price Zerodha will square off ?

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Interesting question, specially when you take huge leverage… what will happen then ?
Although it’s unlikely that leverage enable stocks will hit any circuit.

in such case broker cant square the position as trading is not happening
if you are long you’ll have to bear overnight risk.
and if you are short the position will be sent to auction market.

correct me if i am wrong.

purchase will result in delivery trade and sell will go in auction .

Short delivery (as it is called) has serious consequences and one can lose 20-30% of capital in penalty. I know people who have lost 70-80 thousand on a trade of 5 Lakh, just because they were not able to square off the position the same day.

Do read through this article to understand the whole process completely.

Some key learning:

  • never short a hot stock (i.e. bullish stock)
  • always check the upper circuit limit before shorting
  • always square off the position yourself before the end of the day (some brokers won’t auto square off and the bottom-line is always yours)


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Well Explained but What if I want to convert my position (MIS to CNC) ?

A short position in cash segment can not be converted from MIS to CNC . The conversion will only be allowed if you already have that many shares in your DEMAT account. Most of the time when people short intraday, they don’t have those shares in DEMAT, they are just “borrowing” the shares from the broker to short and are required to square off intraday.

Coversion from MIS to NRML (not CNC) can only be done in F&O segment where there is no concept of short delivery- because they are contracts, not shares.

I hope this makes sense.