Short selling is a trade where you sell first and buy later to profit if the price falls. In India’s cash market with FYERS, this is an intraday-only activity: you must close (buy back) the same day.
How does short selling work?
- Sell first: Place a sell order in the stock for intraday.
- Price moves: If the price drops, your potential profit increases; if it rises, your loss increases.
- Buy back: Purchase the same quantity to close the position (square off).
- Same-day closure: No overnight carry in cash short selling with FYERS.
Example
- You sell 100 shares of XYZ at ₹550 → proceeds ₹55,000
- Price falls to ₹540
- You buy back 100 shares at ₹540 → cost ₹54,000
- Gross profit = ₹1,000 (before brokerage, taxes, and other charges)
FYERS rules for short selling (cash market)
- Intraday only: Short selling is permitted only during intraday trading hours.
- No delivery shorting: You cannot hold short positions overnight in equity delivery.
- Auto square-off risk: If not closed, positions may be taken for exchange auction/close-out on T+1 and penalties may apply.
Tip: Use limit orders when short selling and always square off intraday positions before 3:15 PM to avoid auction risks.
Key risks (including squeeze basics)
- Unlimited loss potential: If price rises sharply, losses can keep growing—use stop-loss.
- Short squeeze: When many shorts rush to buy back, prices can jump faster, magnifying losses.
- Gap & circuit risk: Gap-ups or upper circuits can delay exits.
- Liquidity & slippage: Thin volumes can make buying back difficult at expected prices.
Alternatives for multi-day bearish views
- Sell stock futures (requires F&O segment and margins).
- Buy put options (defined risk).
- Sell call options or use bearish option spreads (advanced; margin applies).
What if…
| Scenario | Explanation |
|---|
| I short sell and forget to close my position | The trade may be taken for exchange auction/close-out on T+1 and penalties may apply. |
| I want to short for more than one day | Use futures or options; cash-market shorts cannot be carried overnight. |
| The stock isn’t eligible for shorting | The order may be rejected or restricted; consider eligible instruments or derivatives. |
| Price rises fast against me | Exit quickly using a stop-loss or reduce size; losses can grow without limit. |
Last updated: 08 Nov 2025