Why do we need to close the intraday position on the same day? Is it mandate?

[shrividya]

It is mandatory to close the intra day on the same day to avoid the overnight risk or penalties.

[ambili]

Intraday trading is a deal not settlment,so exit the position on same day to avoid penalty.

[SRINIVASAN S]

It is mandatory to close the positions in intraday trading on same day.

If stocks were sold, it should be closed by buying pack, failing which following process happens

a)   When you sold short (seller shortage) those shares there was someone on the other side who bought them. He won’t get delivery. So your broker will try to purchase them in a buy-in auction market on T+2 day and the settlement of the auction shall be done on T+3 day (where T is the transaction day, holidays are not included).

b) If the auction is successful the defaulting client (you) will have to pay the actual auction price + Brokerage + Penalty( this depends on your broker)

<span class=”green2 bold_text”>c)What will be the auction price</span> – That depends on the price of the stock on auction day. The lowest or minimum offer price in auction can be 20% below the closing price on a day prior to the day of auction. If it’s lower then you might gain but this difference is not given to you it goes to Investor Protection Fund (some brokers pass the gain to you), if it’s higher you will have to pay the difference. Your broker will send you an email at the end of day with the detailed information.

If the auction is not successful, no one is ready to sell in the auction (generally happens when the stock hits upper circuit), the sell transaction is cancelled by the exchange and the defaulting member has to pay the highest price prevailing from the day of trading (T) up to a day prior to the auction 20% above the official closing price on the day prior to auction day, whichever is higher. The buyer of those shares gets a full refund.

[Ravi]

This is mandatory for any sell.

ie., for any sell trade, the buy trade has to happen on the same day.

Because the settlement happens on the same day.

[M S Vengatesan]

Otherwise settlement will happen , then it becomes a positional trading. While we should have fund to cover the buying , we should have shares if short position is created. Otherwise it may end up in huge loss. So Intraday need to be closed on the same day , better before 3.15 pm.

[Author]

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