What If the script in which I have performed a short sell shoots up to touch the upper circuit?..As 3:20 PM is the square off time in zerodha, Would it still go for an Auction?..
In the above case this is what will follow:
At 3:20 your option to square off manually will not be available, The RMS Computer (Risk Management System) will take over your short sold position and see if there are any sellers for the scrip at Market Price.
If the RMS fails to find a seller between 3:20pm and 3:30pm , it will look for a seller during the post closing market between 3:40pm and 4:00pm at the Closing Price of your Scrip for the day.
If the RMS still fails to find a seller till 4pm, your short sold position will be open till T+2day and squared off by the exchange by auctioning for the required no of shares.
All this done automatically, as a trader there is very little you can do in this case, except hoping that your scrip does not hit 20% UC everyday till T+2 day.
Hope this helps.