Can Power of Attorney be misused by a broker?

Technically Yes, a broker could misuse the Power of Attorney (POA), He can sell your demat holdings without you placing a sale order.

Brokers are subject to strict regulation. This misconduct can lead to severe penalties, or even the loss of membership in exchange and depository (CDSL/NSDL).

Please note that if your trading account is short on margin, the broker can sell shares from your PoA-enabled demat account. This will not be informing you beforehand. This is part the PoA agreement.