Resources and Books on Technical Analysis

In cash market you can only short sell through intra day. As you have to settle the delivery contract amount T+2, if you don’t cover your short during day you will get a notice and it is managed through a mechanism called shortages. I fell once, it’s an auction process which required me to deposit 150% margin before auction takes place. The auction takes place offline where my broker buy shares for me and managed my covering. Very dicey situation, one should avoid.

Second is through underlying instrument like derivatives i.e. futures and options. But as you know derivatives contracts are time bound and written for 200 companies or so. But you can play for 3 months if you short sell.

Third is most popular but process driven is called ‘security lending and borrowing scheme’. Here you can borrow stocks through clearing house, these borrowings can be presented at the time of covering of shorts. This is most widely adopted practice right from Livermore to Bill O Neil.

https://www.nseindia.com/products/content/equities/slbs/slbs.htm

In fact most of short selling I did through derivative contract. I am doing some follow up activity to understand more on this borrowing activity. Though technically all information available on brochure what I have struggled is long tenure of contracts, arbitrary power of borrowers, list of eligible securities etc.

I have gone slow on this as I am never an active short seller. Few transactions I have done mostly through derivatives.

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