Short Delivery
A failure to deliver securities to the clearing corporation by the settlement deadline after having sold them.
How it is identified
Test: the seller's demat balance is insufficient at pay-in, so the sold quantity is not delivered on the settlement date
Unit
qualitative
In depth
Short delivery arises from an uncovered intraday short, from selling shares that have not yet settled into the account, or from an operational error such as shares pledged elsewhere. The consequence is auction settlement plus penalties, so the economic cost is materially worse than simply closing the position at market. It is a settlement failure, not an offence, and the clearing corporation's guarantee means the buyer is unaffected. New investors most often hit it by selling shares bought the previous day in a T+1 cycle before the credit lands.
Worked example
You sell 100 shares at ₹500 but hold only 60 in demat. The 40-share shortfall goes to auction, settling at ₹545, so the extra cost is (545 - 500) x 40 = ₹1,800 before penalties.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Short Delivery” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.