what happens in case of stock (cash) reaching ucl but there are no sellers?
Hi @anugnani
If there is an open sell intraday position, the stock hits the upper circuit limit.
When a stock hits the upper circuit price, there are only buyers in the market, and no sellers are available. This means that it becomes difficult to repurchase the stock that was initially sold for intraday trading. As a result, the intraday trade automatically converts into a delivery trade. Here is a screenshot of Reliance Capital trading at the upper circuit for the day:
If the stock is held in the demat account, it will be transferred to the exchange. However, if the shares are not available, there will be a situation of short delivery or default on the sell trade. Exchanges conduct auctions to purchase the shares on behalf of the seller and deliver them to the buyer of the sell trade on T+2. This may result in an auction penalty based on the settlement price. Additionally, an amount equivalent to 120% of the closing price on the date of the sell trade will be blocked in the account with the narration “Short delivery margin blocked for sale of ” until the auction is completed. To learn more, see What is short delivery and what are its consequences?
Thank you. In this can the shares be bought tomorrow or the day after to avoid auction penalty? Looks like it can’t be because they won’t get credited to our demat account but just wanted to confirm. Is there any reason why the exchange does not allow sellers to sell at a higher price whatever it may be?
Yes, you are right, Buying shares the next day won’t help avoid an auction.
To prevent members from entering orders at non-genuine prices, to prevent manipulation, and to prevent excessive speculation the price bands are applicable for scrips.
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@anugnani Auctions are optional not mandatory. Zerodha RMS also can buy shares for internal settlement. However there is no guarantee they will consider your position for internal settlement or closeout price.
Please read this for better clarity: Youtube - A new way of manipulation and Scams! - #38 by VenuMadhav
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Thanks a lot. But it is better for me (age and risk capacity) to not get into short selling. Even the trade I had was worth about 30k only. So it would not have costed me a fortune. Unfortunately, the price fell by more than 10% but I think I will not get the profit which is supposed to go into some fund. I am planning to shift to icicidirect global account and trade/ invest only in ETFs of USA depending on how much they charge for money transfer to and from india. All along global trading appeared hazy but since mainstream brokers/ banks have started, I will give it a try. I feel NSE and SEBI are not as transparent and retailer friendly and indeed feel that they support the brokers more than the retailers because they get money because of brokers (though it is our money only).
Brokers are raking in massive profits while we’re left in the dark about what’s really going on. Whenever we try to dig deeper, it’s either a dead end or we’re too preoccupied to pursue the truth because of our other responsibilities. Brokerage firm has a whole team dedicated to bending and twisting the rules to line their own pockets. I’ve been through it myself, and to maintain my sanity, I’ve decided to steer clear of these shady dealings.
But brokers RMS can buy shares next day and settle to minimise client losses. That is possible i think.
Then why don’t you give a proper response what is possible in this specific case. Why half information??
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Zerodha for all its great features is a business interested in making profits for itself and they may not be legally wrong if they do not go out of the way to help customers. Their policy on not allowing position conversion (in fno), the policy of not allowing bracket orders with buy order executing first are all designed to make us place more orders so they can maximise profits. Strangely I do not even comprehend how that market wide limit comes into play selectively. I mean what is the bar if it allows a customer to buy options. Think these are too technical for common traders.
“I’ve been through it myself, and to maintain my sanity, I’ve decided to steer clear of these shady dealings.”
Will try to follow your above decision more faithfully.
Thanks.
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