How to short-sell intraday on Zerodha

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Intraday short selling on Zerodha Kite allows you to sell shares you do not own at the current market price, with the obligation to buy them back before the end of the same trading session. If the price falls between your sell and buy, you profit; if the price rises, you incur a loss. SEBI permits intraday short selling in the equity cash segment under a defined framework. The MIS product code makes this possible on Kite. This guide covers the complete procedure for executing, managing and closing an intraday short position on Zerodha.

How intraday short selling works

An intraday short position is opened by placing a sell order using the MIS product code for a stock you do not currently own. The exchange accepts this sell as an intraday short (the regulatory framework for intraday short selling in the equity segment is defined under SEBI’s 2007 short selling circular). Your Positions panel reflects a negative quantity for the scrip.

To close the position and realise profit or loss, you place a buy order (also MIS) for the same quantity before 3:20 PM IST. If you forget or choose not to close, Zerodha’s auto square-off system buys the position back at the market price.

Key constraint: Intraday short selling is only possible within the same trading session. You cannot carry a short position overnight in the equity cash segment. For multi-day short exposure to equities, use the futures segment (F&O, futures contract).

Step-by-step procedure

Log in to Kite

Open kite.zerodha.com or the Kite mobile app and sign in with your client ID, password and TOTP.

Locate the scrip in the marketwatch

Find the stock you intend to short in the marketwatch. Review the market depth to understand the current bid-ask spread and available liquidity. For intraday short selling, prefer liquid large-cap or mid-cap stocks with narrow spreads and significant volume, as exits will be easier.

Open the sell order ticket

On Kite web, hover over the scrip row and click the red S (Sell) button. On the mobile app, tap the scrip to open the quote screen, then tap Sell. The order ticket opens.

Select MIS as product code

In the order ticket, set the Product field to MIS (Margin Intraday Square-off). This is the critical step that enables short selling. If you set the product to CNC and attempt to sell a stock you do not hold, Kite will reject the order with an error indicating insufficient holdings.

Select order type and enter quantity

Order type options:

  • MARKET: Sells immediately at the best available bid. Fastest execution but subject to slippage.
  • LIMIT: Specifies the minimum price at which you are willing to sell. Use this when you want to sell at a specific price (for example, at a resistance level).
  • SL or SL-M: Conditional sell order; less common for the opening leg of a short, but useful for automated entry triggers.

Enter the number of shares in the Qty field. Kite displays the required margin for the position. Verify that your available margin (shown in the top bar) is sufficient. If the required margin exceeds your available margin, reduce the quantity.

Submit the sell order

Click the Sell button. Kite routes the order to the exchange. A confirmation toast appears. Navigate to Portfolio > Positions in the left panel.

The open short position is visible in the Positions screen with a negative quantity. For example, if you short-sold 100 shares of a stock, the position shows -100 in the Qty column. The P&L column shows your unrealised profit (positive if the price has fallen from your sell price) or loss (positive if it has risen).

Monitor the position

During the session, watch the LTP in the marketwatch and monitor the Positions screen:

  • Unrealised P&L: The profit or loss if you were to cover the position at the current LTP. This updates in real time.
  • Stop-loss: Place an SL or SL-M buy order to automatically limit losses if the price rises against you. See How to place an SL-M order on Kite.
  • Target exit: Place a limit buy order at your target price (below your sell price) to take profit automatically.

Cover (buy back) before 3:20 PM IST

To close the short position, place a buy order for the same quantity using MIS:

  1. Navigate to Portfolio > Positions.
  2. Hover over the short position row and click Exit to open a pre-filled buy order ticket for the exact short quantity. Alternatively, open a new buy order ticket for the same scrip, select MIS and enter the quantity.
  3. Select MARKET for immediate execution or LIMIT with a price at or above the current ask.
  4. Submit the buy order.

The two MIS legs (the initial sell and the closing buy) net to zero. The position disappears from the Positions screen. The P&L from the round-trip (sell price minus buy price, multiplied by quantity, minus brokerage and charges) is your realised P&L.

Charges for intraday short selling

Brokerage: Zerodha charges a flat fee per executed order (capped at Rs 20 per leg) for intraday trades. Both the sell and the buy leg incur brokerage.

STT: For equity intraday sells, the Securities Transaction Tax is 0.025% of the sell-side turnover only. You do not pay STT on the buy side of an intraday round-trip (unlike delivery trades where both sides attract 0.1%).

Exchange charges, SEBI fees, GST: Applied as per standard exchange rates.

What can go wrong

  • Short selling rejected with “Insufficient holdings.” This means the product code was set to CNC, not MIS. Re-open the order ticket, set product to MIS, and resubmit.
  • Margin shortfall. If the exchange increases the VAR+ELM margin requirement during the session (which can occur during volatile periods), your existing short position may face a margin call. Zerodha will notify you; add funds or reduce the position size.
  • Auto square-off at an unfavourable price. If you could not exit manually before 3:20 PM IST and the market moved sharply against you before the auto square-off, the realised loss may be larger than you intended. Always set a stop-loss on intraday short positions.
  • Halt or circuit on the scrip. If the stock hits its upper circuit limit during the session, buy orders may not fill (no sellers at the circuit price). You cannot cover your short if the stock is locked at the upper circuit, and Zerodha’s auto square-off may also face difficulty. This is a significant risk for illiquid or mid-cap stocks; prefer liquid large-cap stocks for intraday shorts.

References

  1. Zerodha Support, How to short sell on Zerodha, support.zerodha.com.
  2. SEBI, Short selling circular, SEBI/MRD/DoP/SE/Cir-11/2007, sebi.gov.in.
  3. NSE India, Intraday short selling, product codes and margin requirements, nseindia.com.
  4. BSE India, Intraday trading guidelines for equity cash segment, bseindia.com.
  5. Zerodha Varsity, Short selling, concepts and execution, zerodha.com/varsity.

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