I lost Rs.33,400/- last Friday. I couldn't do anything as the share reached circuit much before 2 pm. Is there any option that we could buy the shares that fell short and replenish the shortage, rather than incurring heavy loss. They charged highest price of the day plus 20%. The share I sold short for Rs. 1,52,000, they auction for 1,85,000, and the entire loss was to be borne by me. Whereas the share is on downward trend. I had sold it for Rs. 19.01 now the price is 18.15 or so. The broker has not given me full details of the auction.
It is high time that new system is evolved so that the traders not unduly penalized.
1. If some else had shares of this company, how he could help me, as no transaction was possible once it had hit the upper circuit?
2. Yes I have an account with Karvy. They did not give me detail of the auction, buy only the following data :
I feel they should have given the full details, as how to they settled my short.
3. Could I have bought the same share in "delivery", to square off the position?
4. Could I do anything the next day?
1. If you find a person who is willing to lend you his shares, you can ask him to transfer the shares to your account or your broker's pool account.
You can deliver these shares against your delivery obligation.
Later, when you can buy the shares from the open market and give them back to your friend.
2. Write to you broker and ask them whether it an internal shortage or shortage at exchange level.
Also, ask them how do they close-out internal shortages.
Was this trade done at the NSE?
If you don't get a proper reply, you can always complain to the NSE.
3. If a share hits the upper circuit, there is no way anyone can buy any shares.
Of course, if someone comes and sells, then trades can happen.
Did you put a buy order at upper circuit price when the stock hit the upper circuit?
4. Nothing can be done on the next day. If you buy shares on the next day (T+1 day), you will get the shares after another 2 days (T+3 day). You have to deliver the shares on T+2 day and so getting shares on T+3 day won't help you.
I lost Rs.33,400/- last Friday. I couldn't do anything as the share reached circuit much before 2 pm. Is there any option that we could buy the shares that fell short and replenish the shortage, rather than incurring heavy loss. They charged highest price of the day plus 20%. The share I sold short for Rs. 1,52,000, they auction for 1,85,000, and the entire loss was to be borne by me. Whereas the share is on downward trend. I had sold it for Rs. 19.01 now the price is 18.15 or so. The broker has not given me full details of the auction.
It is high time that new system is evolved so that the traders not unduly penalized.
You sold something to someone through your broker. When the buyer wanted to collect what he purchased from you, you were not able to deliver it. So your broker arranged for delivery through other sources & billed you for his cost, expenses & time spent. If you shouldn't pay for this, then who should?
Yes I had put a buy order after it reached upper circuit. But, when it didn't materialize, I canceled it the same day. If my buy order was there alive, could the broker sell me the shares, to fish me out from the predicament?
I sent a mail to the broker asking them about the details of the auction. They didn't just reply.
If the broker hasn't sent you the bill for the auction, keep a scanned copy of your ledger ready (showing the credit and debit entries for the trade and the subsequent auction).
NSE Cash Market JE 2 Sep 16, 2010 201000005751 Provisional Auction debited for sett.no.2010175 204960.00 0.00 -1389.78
NSE Cash Market JE Sep 17, 2010 201000005838 Provisional Auction debit Reversed for sett.no.2010175 0.00 204960.00 203570.22
NSE Cash Market BILL Sep 17, 2010 201000000469 Settno=2010175NSECMAFinal Bill 185570.40 0.00 17999.82
They are not replying to my mail asking for details of auction.
Are they not supposed to give me the NSE auction details, for such a huge amount? I feel they have done internal adjustments and deducted the amount with 20% penalty, as NSE should have done.
Are they not supposed to give me the NSE auction details, for such a huge amount? I feel they have done internal adjustments and deducted the amount with 20% penalty, as NSE should have done.
The broker is supposed to send the bill/contract note for each and every transaction - even if it's just a Rs 10 transaction.
You are unlikely to get an answer unless you complain to the NSE.
I can only guess what could have happened. Only the broker can give you the accurate details.
Thank you for the complaint site. I made the following complaint. Is it in order ?
1 . Non-issuance of documents by the trading member
Order / Trade Related documents
No Contract Notes / Bills Date of Trade Settlement No.
From To From To
1 Contract Notes 14-Sep-2010 17-Sep-2010 2010000004 ---
Additional Information
8000 shares of Rama Newsprint short position could not be settled on 14.9.2010 due to upper circuit. Rs.34,000/- deducted from my account on 17.9.10. No details of auction etc. was provided to me despite repeated requests by email. The share was sold (short) @ Rs.19.01. On 17.9.10 the highest rate was Rs.20.40. I am in dark about the details of auction, if any. I am new the trading and not proficient with rules. Kindly help.
Shorted Deltacorp at 82.00 X 100 since its highest price last week was 81.40. It went up to 84, so shorted another 100. Went and hit upper circuit at 87.10. I placed a market buy order but nothing happened.
I've got 83.00 X 200 now (Rs. 16600). Will the auction price be calculated on today's high, or T+2 Wednesday's high? Is it possible to give a rough idea on the loss I'll incur?
When a stock hits the upper circuit, does it mean we should buy it over the next few days as it is going to go up?
Shorted Deltacorp at 82.00 X 100 since its highest price last week was 81.40. It went up to 84, so shorted another 100. Went and hit upper circuit at 87.10. I placed a market buy order but nothing happened.
I've got 83.00 X 200 now (Rs. 16600). Will the auction price be calculated on today's high, or T+2 Wednesday's high? Is it possible to give a rough idea on the loss I'll incur?
When a stock hits the upper circuit, does it mean we should buy it over the next few days as it is going to go up?
I might be able to lessen my loss that way.
Who is your broker?
If you are trading with a big broker, this position may lead to an internal shortage for the broker.
It is very difficult to predict the loss that you will incur.
As the stock hit upper circuit, there must be many traders like you, who wouldn't be able give delivery on T+2. The number of shares that will come up for auction on T+3 will be large.
If shares are not bought in the auction, the short position will be closed out on cash basis and this may mean a big loss for you.
As the stock hit upper circuit, there must be many traders like you, who wouldn't be able give delivery on T+2. The number of shares that will come up for auction on T+3 will be large.
At the time the market closed, the number of buyers was : 647659.
If shares are not bought in the auction, the short position will be closed out on cash basis and this may mean a big loss for you.
Didn't understand this. Closing on cash basis means I have to pay the upper circuit price X 200?
When I faced an auction earlier (buying on Wednesday and not receiving delivery and then selling on Thursday and not giving delivery), I had received an email from the broker on Friday saying I should transfer the shares by 10:00 AM Monday, or else there would be an auction. But from what I've understood, buying tomorrow won't make any difference, right?
The broker is Fullerton Securities. What is its reputation among you pros?
Didn't understand this. Closing on cash basis means I have to pay the upper circuit price X 200?
But from what I've understood, buying tomorrow won't make any difference, right?
Buying now won't make a difference.
If you short on day T, you have to give delivery on T+2 day.
If you buy the next day, T+1, you will get delivery on T+3, which is one day after T+2.
If shares are not bought in the auction, the short position will be closed out on cash basis and this may mean a big loss for you.
From NSE's site:
Quote:
Close out will be at the highest price prevailing in the NSE from the day of trading till the auction day or 20% above the official closing price on the auction day, whichever is higher.
If you had been trading with a big broker like Kotak Securities, then most probably your short position would have resulted in an internal shortage.
In that case, Kotak's own rules would have applied.
For internal shortages, this is what Kotak Securities does:
Quote:
KSL as a member of the exchange deliver/receive securities from the exchange on net obligation basis in respect of a settlement. In such a process, if a client short delivers the securities, which are to be delivered to another client of KSL, it is treated as internal shortage of securities. In case of internal shortages on pay in day, on or about the next working day, KSL will endeavor to buy the shares from the market on behalf of the client who has delivered short and deliver the same to the client who has bought them. The client who has delivered short will be debited with the rate at which the shares were purchased or the rate at which the said shares were sold by him, whichever is higher.
Alchemist - this question is purely out of curiosity.
About short selling, how does the broker ensure that you have money enough to pay in case the stock goes up, there is an auction etc? And that you pay it in case it happens?
Do you have to transfer some money into the account before you can sell short? If so, how is the amount calculated?
The stock went to 95.10 today, but didn't hit upper circuit. Today's total traded quantity was 14056202, compared to yesterday's 6864676.
Alchemist, would you recommend this stock over the next few days? When a stock hits upper circuit, does it keep going up over the next two or three days? I might be able to cover some of the loss I'll incur in the auction this way.
Of course, if it goes up, the auction price will also be high.
Alchemist, would you recommend this stock over the next few days? When a stock hits upper circuit, does it keep going up over the next two or three days? I might be able to cover some of the loss I'll incur in the auction this way.
Of course, if it goes up, the auction price will also be high.
Bought 200 at 82.10 today.
If a stock hits upper circuit on day T, the stock usually closes up on T+1 day too.
I have not observed any correlation between stock hitting upper circuit on day T and price on T+2 or T+3.
The stock can go in any direction on T+2 and T+3 day.
Even if the stock goes down in next 1 or 2 days, there is still a possibility that you will incur a big loss.
As I said earlier, the auction quantity on Thursday will be large and all shares may not be bought in the auction.
Your long position will protect you if the stock goes up further.
However, if the stock goes down, the long position will bring a loss too.
Is it possible to give a rough idea on the loss I'll incur?
Most probably somewhere between Rs 800-1800. From the little experience I have gathered till date, I would suggest-ALWAYS AVOID INTRADAY TRADE IN STOCKS WITH 10% CIRCUIT LIMIT.
Okay, another thing has happened now. As I've said earlier, I shorted Deltacorp at 83.00 X 200 on Monday (25th).
On Tuesday, I received an email from the broker saying my sell order had been reported as a short delivery, and that there would be an auction. I found this a bit strange since I thought I would get the email only on T+2, Wednesday. Anyway, on Tuesday, I did intraday, buying and selling 400 Deltacorp shares and closing that position. I also bought 200 at 92.10 and took delivery.
Today (28th October, Thursday), I have received another email from the broker which says my buy order of 200 shares has been reported as a short delivery. It also said "The shares will be auctioned by the exchange on T (Trading) + 4 working day basis and you may either receive Full/partial quantity of shares or an Auction Square up credit against your buy transactions." It took me some time to understand that this was my buying and taking delivery of Delta Corp on Tuesday. I had to make sure using the settlement number quoted in the email.
I haven't received an auction statement for the short-selling yet. T+4 for Monday would be tomorrow, Friday. I have also not sold off the 200 shares I bought on Tuesday, but since I bought them on margin, I'll have to sell them soon or give a cheque.
If I sell them off tomorrow, the delivery will be given on next Tuesday. My this Tuesday buy's auction will be on next Monday, so will everything have been settled by then or will I invite another auction for not giving delivery on next Tuesday for tomorrow (Friday's) selling shares?
Second, can I hope to partially recover the loss I'll make from the auction due to my short-selling with this second auction? The person who gives a short delivery is penalized, and so I'll have to suffer a loss for this Monday's short-selling. But what happened on this Tuesday is not my fault.
Edit: The highest Delta Corp has gone till Thursday is 96.20. Today (Thursday) it fell, from yesterday's high/low of 96.2 / 91.5 to today's 94.20 / 88.25, and volumes falling from 5655034 to 2483150.
Last edited by PrashantS : 28th October 2010 at 06:53 PM.
If I sell them off tomorrow, the delivery will be given on next Tuesday. My this Tuesday buy's auction will be on next Monday, so will everything have been settled by then or will I invite another auction for not giving delivery on next Tuesday for tomorrow (Friday's) selling shares?
Second, can I hope to partially recover the loss I'll make from the auction due to my short-selling with this second auction?
Don't sell any shares.
You may not get the shares in the auction.
If you sell now and the shares are not bought in the auction, you will again have to face an auction.
If you repeatedly give short deliveries, your broker may even close your account. As far as possible avoid giving short deliveries.
You may or may not recover your loss. Nothing can be said now. You will know when you receive the final bills from your broker.
Auctions are held on T+3 day on NSE.
The auction for your Monday's short position would have take place today.
Received the auction bill today. The shares were auctioned at 101.01. Delta Corp's high so far has been 96.20, which was on 27th (Wednesday).
What this means is that I bought the shares at 101.01 and sold them at 83.00, right? That's 18.01 loss per share, or Rs. 3602 for 200 shares. The highest profit I generally make on Delta Corp is around Rs. 3 per share.
At least, the whole auction thing is behind me now. From now on, whenever I short a stock, I'll calculate the upper circuit first, and put a stop loss, even though it's only a rupee below the upper circuit.
Oh by the way, shorted Delta Corp today at 91.30 X 200, bought at 90.10. Calculated the upper circuit - that's previous close divided by ten plus today's open price, isn't it?
There'll be another auction tomorrow (Monday) for my receiving a short delivery on this Tuesday.
Oh by the way, shorted Delta Corp today at 91.30 X 200, bought at 90.10. Calculated the upper circuit - that's previous close divided by ten plus today's open price, isn't it?
Circuit limits can change overnight.
You should check NSE's site for the applicable price band and then calculate the circuit limit.
e.g.
For Delta Corp, go to the "Get Quote" page on NSE's site and then select "Price Band".
About short selling, how does the broker ensure that you have money enough to pay in case the stock goes up, there is an auction etc? And that you pay it in case it happens?
For day-trading, traders have to maintain a margin.
The margin is usually 10%-20% of the position size.
The margin varies from stock to stock and broker to broker.
Lets say a short-seller sells a stock at a price of Rs 100 and has 10% margin (Rs 10) with the broker.
Till the stock goes to 110, the loss is covered by the margin.
If the stock goes above 110, the broker will ask for additional margin. If the client doesn't provide additional margin, the position will be closed.
Positions taken online may get squared-off automatically if the margin falls below threshold levels.
The margin maintain by the trader usually is enough to compensate for his losses.
------------------------------------------
If the stock hits upper circuit and the short-seller doesn't have shares to deliver, the broker blocks a margin which the broker feels will be enough to cover the auction losses.
The blocked amount (valuation debit) varies from broker to broker. Kotak Securities blocks 150% of the "Valuation Price".
(Kotak gives the client credit for the sold shares, but blocks 150% of the Valuation Price).
If the client's account has less money than needed for the "valuation debit", the broker blocks the shares in the client's demat account. This is possible only if the demat account is with the same broker.
Thus, the broker recovers the auction bill from either the margin in the client's account or from the shares held by him.
If the total of the balance in the client's account and the value of his shares is less the actual loss, then the broker has to ask the client to pay up for the losses.
If the client refuses to pay for the losses, the broker can take legal action against the client, but that is a very lengthy process.
Hello Alchemist. I got the auction statement for my buy order of last Tuesday which was short delivered. It has been auctioned at the exact same price (101.01), and the same amount that had earlier been debited from my account has been credited back.
I understood the earlier auction as, I bought Deltacorp at 101.01 X 200 and sold them at 83.00. So does this mean that in the second auction, I bought at 92.10 X 200 and sold them at 101.01? There's a sentence that says "Your above mentioned purchase transaction has been Squared off at the rate of Rs.101.01. If you wish to Purchase the said shares again, kindly let us know."
So profit - loss = 1782 - 3602 = 1820 loss. Am I right in calculating this way?
Hello Alchemist. I got the auction statement for my buy order of last Tuesday which was short delivered. It has been auctioned at the exact same price (101.01), and the same amount that had earlier been debited from my account has been credited back.
I understood the earlier auction as, I bought Deltacorp at 101.01 X 200 and sold them at 83.00. So does this mean that in the second auction, I bought at 92.10 X 200 and sold them at 101.01? There's a sentence that says "Your above mentioned purchase transaction has been Squared off at the rate of Rs.101.01. If you wish to Purchase the said shares again, kindly let us know."
So profit - loss = 1782 - 3602 = 1820 loss. Am I right in calculating this way?
Yes, you are right.
1820 (plus transaction charges if any) is your final loss.
I just noticed that 101.01 = 105% of 96.20.
96.20 was the highest price reached in the last week.
I guess both your short positions (as a seller and as a buyer) did not lead to an auction, but were internally settled by your broker based on some rule for internal shortages.
I guess both your short positions (as a seller and as a buyer) did not lead to an auction, but were internally settled by your broker based on some rule for internal shortages.
The name of the bill is Auction Bill (NSE), and it has a settlement no. as well.
In any case, I'd like to thank you Alchemist. I was going to make a big mistake last Friday. My thinking was that since the auction for last Tuesday's short would be held on this week's Monday, I could sell the shares on last Friday since I would have to give delivery on this week's Tuesday, and the shares would be in my account because of Monday's auction. But in the auction, I was given money and not the shares. If I had sold the shares on Friday, I would have had to face another auction. Thanks a lot!
Shorted Stock Hit Upper Circuit
.
Linear Mode
