What is a margin call in MTF?
When a share price falls, your broker can ask you to add money or shares. If you don’t, it can sell your shares, often at a bad price.
A margin call on ₹1,00,000 of shares after a 10% fall
| You paid (27.5%) | ₹27,500 |
|---|---|
| The broker funded | ₹72,500 |
| The shares are now worth | ₹90,000 |
| Your part now (value minus the loan) | ₹17,500 |
| Your part must be at least 27.5% of the value | ₹24,750 |
| Shortfall to add | ₹7,250 |
A simplified illustration, using the example margin from NSE’s MTF FAQ and leaving out interest and charges. Margins change daily, and your broker can ask for more.
What is a margin call?
It is your broker telling you that your share of the trade has fallen below the required level, and that you need to add money or shares.
Your broker must keep your margin at the required level every day. It checks this against the lower of what you paid and what the shares are worth now, so a fall in price counts straight away.
Sources: NSE FAQ on Margin Trading Facility, updated 12 Mar 2025
What happens if you don’t add money?
The broker can sell your shares to get its money back. This is called a square-off, and you don’t choose the price.
How long you get, and how you are told, depends on your broker. Read its policy before you trade. Any loss, interest and charges still come out of your account after the sale.
Sources: NSE FAQ on Margin Trading Facility, updated 12 Mar 2025
Why does it happen at the worst time?
Margin calls come when prices are falling, and that is when many other people are being sold out too.
Forced selling can push prices lower, which can trigger more margin calls. You can end up selling near the bottom and missing any recovery. See the days this has happened on our risk page.
Sources: flush days, via our risk page
How can you meet a margin call?
Add cash, add Group I shares or equity ETFs you already own (valued after a cut), or sell part of the position yourself.
Selling part yourself repays some of the loan and shrinks the amount that can lose money. Which options you get, and how quickly they count, depends on your broker.
Sources: NSE FAQ on Margin Trading Facility, updated 12 Mar 2025
Is pledging more shares a safe way out?
It can buy time, but it puts more of your holdings at risk if the market keeps falling.
Shares you pledge are also falling in a broad sell-off, and they lose value as margin at the same time. You can then get another call, with more of your portfolio tied up. Before pledging more, ask whether you would buy this position today at this price.
Sources: this site’s own reading
How do you lower the chance of one?
Use less than the maximum funding, keep spare cash aside, and decide in advance where you will sell.
A smaller position needs a bigger fall before a call arrives. Our margin call calculator shows how far a price can fall for your own numbers, and the checklist covers the rest.
Sources: this site’s own reading