Impact of Circuit Limits on Intraday Positions

What will happen to my Intraday position if the stock hits the circuit limit?

Equity Intraday trading lets you leverage your positions—buying or selling stocks up to five times your account balance. However, these positions must be squared off on the same day. If they aren't, we aim to close them around 3.15 PM. Occasionally, a stock may hit its circuit limit, either upper or lower, temporarily halting trading at that price.

A circuit limit acts as a market safeguard, setting a defined price range for each stock to prevent extreme price fluctuations. For instance, if Bajaj Auto Ltd. has an upper circuit limit of ₹4992.75 and a lower limit of ₹4085.05, trading halts if these thresholds are breached.

Possible scenarios include:
  1. For an open Intraday sell position hitting the upper circuit: No sellers are present, only buyers. You won't be able to buy back, converting the position to delivery for auction settlement. A 120% margin of the closing price is then blocked. Auction settlements can be:
    1. Internal: On T+1 day, using the previous day's highest bid.
    2. External: Managed by the exchange on T+1, potentially incurring up to a 20% penalty.
  2. For an open Intraday buy position reaching the lower circuit: Selling the purchased shares isn't possible. The position converts to delivery, requiring adequate funds for share delivery to your Demat account. If funds are insufficient, you need to either add funds or liquidate other holdings. Failure to manage the shortfall will lead to the sale of your holdings.
To mitigate such risks, we strongly suggest monitoring Intraday positions diligently and ensuring they're squared off well before market close.