What will happen to my (Intraday/ Longterm) position in case the stock circuit limits are hit?

Intraday vs. Long-Term Positions & Associated Risks

A client can take positions in two ways based on their trading style:

• Intraday Position (same-day trading)
• Long-Term/Delivery Position

For intraday trades, it is mandatory to square off all positions on the same trading day. If a client fails to do so, 021 Trade will attempt to close the open positions before market close, as per the cut-off timings defined in the RMS Policy.

Important Risk in Intraday Trading

Intraday trading involves leverage, which increases both potential returns and risks. One key risk arises when a stock hits its upper or lower circuit limit, restricting your ability to exit the position.

This may lead to:

• Conversion of intraday position into delivery
• Short delivery or margin shortfall
• Auction penalties

Example 1: Open Sell Position & Upper Circuit

• You sell 500 shares of Tata Motors at ₹900 (intraday short sell)
• The stock hits the upper circuit at ₹945
• Only buyers are present; no sellers are available

Impact:

• You cannot buy back shares to square off the position
• The position gets converted into a delivery trade

Outcome:

• If shares are available in your demat account → they will be delivered
• If not → it results in short delivery

Further Action:

• Exchange conducts an auction on T+1 day
• Shares are delivered to the buyer on T+2 day
• Meanwhile, 120% of the stock’s closing price is blocked in your account under:
  “Short delivery margin blocked for sale of Tata Motors”

Example 2: Open Buy Position & Lower Circuit

• You buy 300 shares of HDFC Bank at ₹780 (intraday)
• The stock hits the lower circuit at ₹ 705.95
• Only sellers are present; no buyers are available

Impact:

• You cannot sell the shares to exit
• The position gets converted into a delivery trade

Outcome:

• If sufficient funds are available → shares are credited to your demat account
• If funds are insufficient → you must:
  • Add required funds, or
  • Sell existing holdings

If no action is taken:

• 021 Trade may liquidate your holdings to recover the shortfall

Key Takeaway

• Always monitor your positions actively
• Maintain sufficient margin and funds
• Be aware of circuit limits and their impact on liquidity
• Understand the risks of leverage before trading intraday