Is margin trading facility adding to the pressure in smallcap and midcap stocks?
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- ✓The Nifty Midcap 100 and Nifty Smallcap 100 fell up to nine percent over the past month.
- ✓The margin trading facility book dropped to Rs 1.51 lakh crore in October as investors cut leveraged positions.
- ✓Chandan Taparia said, "We have also seen margin funding-related pressure and the liquidation of positions."
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- MARKET
- Reported By
- Moneycontrol
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- 3 Minute(s)
- Market Focus
- India Economy
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The sell-off in the small- and mid-caps over the past month has left portfolios across the country reeling from losses, with a portion of the drawdown contributed by the margin trading facility (MTF).
Over the past month, the Nifty Midcap 100 and Nifty Smallcap 100 have fallen up to nine percent, erasing crores in wealth. Companies with seemingly strong fundamentals have seen their stocks stage a double-digit fall, while other shares have gained significantly.
The MTF book, which touched a high of Rs 1.6 lakh crore, has fallen to Rs 1.51 lakh in October as investors cut leveraged positions and reduce exposure. "Over the past three or four days, we have also seen margin funding-related pressure and the liquidation of positions in stocks," said Chandan Taparia, Head of Technical & Derivatives Research, Motilal Oswal.
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