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 each stock, the margin is calculated as VAR + 5 × ELM

Example of Margin Calculation:

Let’s assume a stock is priced at ₹400 . 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%

If you have ₹400 as margin in your trading account and a stock requires a margin of 32% of its market price, you can calculate the number of shares you can buy as follows:
Number of shares = ₹400 (margin available) ÷ 32% of the stock’s market price.
For example, if the stock’s market price is ₹400, the margin required per share would be 32% of ₹400, which allows you to buy:
Number of shares = ₹400 ÷ ₹400 × 32% = 3.125 shares (approximately 3 shares).
This means with ₹400 in margin, you can purchase up to 3 shares of this stock.