Hello,


I had short 4000 shares of Paramount Printpackaging @ Rs 28 but unfortunately I was unable to cover it in intraday. I have heard that there is some auction system. How does it work and what can be the damages to me? Please reply.

As the stock closed at upper circuit, many other short-sellers would have been trapped too.

There is nothing that you can do about it now.

All these undelivered shares would be purchased in an auction.

The auction will happen on T+2 day (Friday).

You will have to pay for the shares that will be purchased in the Friday auction.

The auction price will be higher than the market price on Friday.

Be prepared for it - your loss will be significant compared to your position size.

Do you know anyone else who can deliver the shares on your behalf on Friday? I guess not. Otherwise you could have borrowed the shares and delivered them on Friday.

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Can you tell me what can be the approximate loss? On what basis is this calculated?

The shares that you won't deliver will be bought from the auction market.

The prices in auction market are higher than in the cash market.

As the stock had hit upper circuit yesterday, a lot of shares will be have to be bought from the auction market on T+2 day (tomorrow).

My guess is that the auction price will be 4%-8% above the price of Paramount Printpackaging in the cash market.

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Today 107036 shares of Paramount Printpackaging had to be auctioned.

The stock took-off just when the auction started (2 PM).

I guess the final auction price must be around 38.

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When I looked at the NSE historical data, I found that on 11th, when it was in upper circuit, the upper circuit price is 31.15, and the last price is also 31.15, but the close price is 30.95. Does that mean that the circuit was opened at the very end?

Alchemist, where did you get the data about the 107036 shares that had to be auctioned?

I thought the auction was done at a separate time and only brokers are allowed, we are not allowed to trade in it.

Closing price is the last half an hour weighted average price.

If a stock hits the upper circuit in the last 10-15 minutes of trading, the closing price (weighted average of last half an hour) will be lower than the circuit price.

The list of stocks to be auctioned is available here:

http://www.nseindia.com/content/nsccl/AUB.csv

Auction is done on the same day as the settlement, T+2 day.

If you want to know which stocks will be auctioned on a particular day, you can know only after the settlement has been completed on that day.

Auction happens during market hours, but it's a separate market. Clients can participate in auction too, but as far as I know, no broker offers this facility online.

If you want to sell shares in auction, you will have to go to your broker's office to place an order.

http://www.bseindia.com/downloads/Tr...file/BCCSM.pdf

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