Small, mid-cap plunge triggered by margin calls

Small, mid-cap plunge triggered by margin calls

Mumbai: Shares of small and mid cap companies witnessed huge selling pressure as some brokers sold shares after their clients were unable to pay adequate margins, three dealers said.

“We had seen a spectacular run in the small and mid-cap companies and many of them were leveraged," said a senior dealer.

He added during volatility, brokers, as a risk management practice, raise the margins and failure by customers to top up the margins would lead brokers to sell the shares of their clients.

However, there is no margin pressure on the exchange side. “There is no default and pay-in and pay-out are happening on time. There are no margin pressures. Settlements are happening on time," Divya Mallick, NSE spokeswoman told the news agency.

At 11.40am, the BSE Small-cap index was down 5.17% while the mid-cap index was down 3.8% while the broader market was down 0.6%.