Both buying and selling of shares require upfront margins.
Few points to note in terms of selling:
Intraday short-selling will require a minimum of 20% of the trade value as margins.
For example, Mr Raj wants to short sell (intraday) 1000 shares of ITC for Rs. 200 per share.
For this, he will be required to have Rs. 40,000 (20% of Rs. 2 lakhs) as margins in his trading account.
Scripwise intraday margin requirements can be checked onMyGeojit
Selling your positions before settlement (before shares are credited to your Demat account) will require a minimum of 20% of the trade value as margins.
For example, Mr Raj purchased 1000 shares of ITC for Rs. 200 per share on Jan 17th, Monday. For this trade, Rs. 40,000 (20% of Rs. 2 lakhs) was blocked/debited in his trading account.
These shares will be credited to Mr Raj's Demat account on Jan 18th, Tuesday (T+1).
If Mr Raj wishes to sell the purchased shares on Jan 18th, Tuesday (T+1), he will be required to have an additional margin of 20% of the trade value in his trading account. So, assuming the sale value to be Rs. 2,25,000, he will have to maintain an additional margin of Rs. 45,000 (20% of Rs. 2,25,000) in his trading account.
Hence, a total of Rs. 85,000 (40,000 + 45,000) will be blocked as margins in Mr Raj's trading account.
- Selling from your holdings does not require any margin.
The delivery margin is NIL only if the broker provides early pay-in of sold securities to the exchange i.e. if the broker blocks the securities in the client's demat account by the evening on the trade day (T). Trades executed through Geojit are normally provided as early pay-in to the exchange.
Margins can be maintained as cash, pledged securities, or a combination of the two.