An intraday (MIS/CO) order allows you to use leverage to enter into buy or sell trades (up to 5 times the money in your account). Buy trades for more than the money in your account and sell/short trades where you can sell a stock without holding it in your Demat. But such intraday trades are required to be compulsorily squared off by you on the same day. If you don’t square off an intraday position, our system will attempt to exit it on your behalf as per the timings mentioned here , typically around 3.20 pm every day.

But every time you trade using MIS/CO, other than the risk of losing money due to leverage, you carry an added risk of not being able to square off your positions due to the stock hitting either upper or lower circuit. You can end up with a potentially large overnight and auction risk on positions taken with leverage. Check this article to know more about circuit limits .

If you have an open sell intraday position & stock hits upper circuit

If a stock hits upper circuit price, you will have only buyers and no sellers. So you will not be able to buy back the stock sold for intraday. So this intraday trade will end up converting to a delivery trade. In the below image you can see an example of Reliance Capital trading at the upper circuit for the day:

If you by chance had this stock in your demat, it will be transferred to the exchange. If you don't have the shares, you will end up short delivering or defaulting on the sell trade. Exchanges conduct an auction to buy the shares on your behalf and deliver to the buyer of your sell trade on T+2 (Trade date+2). This can lead to an auction penalty depending on the price at which the exchange settles the trade. Also, 120% of the closing price on the date of the sell trade will be blocked in your account with the narration “Short delivery margin blocked for sale of <scrip name>” until the auction is complete. Learn more .

If you have an open buy intraday position & stock hits lower circuit

If a stock hits the lower circuit, you will have only sellers and no buyers. So you will not be able to sell the shares you had bought for intraday. This will again get converted to a delivery trade. In the below image you can see Adani Power at the lower circuit for the day:

The stock will be delivered to the demat account if there are enough funds in the Zerodha account. However, if there aren't enough funds in the demat account, the client can either add the required funds or sell the existing holding to the extent of the required funds failing which the stock will be sold to the extent of the funds required by Zerodha.