How is the Margin Calculated?

The margin required for MTF depends on two factors: the Value at Risk (VAR) and the Exposure Limit Margin (ELM) for each stock.
 
- For stocks with F&O (Futures and Options) contracts, the margin is calculated as: 
  VAR +3 × ELM
- For non-F&O stocks, the margin is: 
  VAR +5 × ELM
 
Example of Margin Calculation:
 
Let’s assume a stock is priced at ₹400 and it’s a non-F&O stock. The margin requirement for this stock is calculated as VAR + 5 × ELM
 
- VAR: 7% 
- ELM: 5%
 
Now, let’s calculate the margin requirement:
 
Margin = VAR + (5 × ELM)
Margin = 7% + (5 × 5%) 
Margin = 7% + 25% = 32%
 
Thus, for a stock priced at ₹400, the margin required to buy it would be ₹128 (32% of ₹400). This means with ₹400 in your account, you can buy:
 
Number of shares you can purchase = ₹400 ÷ ₹128 = 3.125 shares (Approximately 3 shares)
 
So, with ₹400 in your trading account, you could buy 3 shares of this stock, with a margin requirement of ₹128 per share.