It’s important to understand that the margin you receive from your pledged holdings can fluctuate based on the changing value of those holdings. This is due to the concept of haircut, which is a percentage deduction applied to the market value before calculating the margin.

The value of your pledged holdings and, consequently, the available margin, are recalculated based on the lower of closing price of the previous day or the intraday low in case the stock falls further from the previous day’s low. This adjustment is reflected in your account on a live basis.

For example, if you pledge stocks whose holdings are valued at ₹1,000 with a 20% haircut, you will get a margin of ₹800 (₹1,000 x (1 – 20%)).

If the stock price drops to ₹900 on the same day of closing, then the margin will be recalculated based on the new value:

New margin = ₹900 x (1 – 20%) = ₹720

If on the current day, the intraday low of ₹890 is made then the value of the margin will be recalculated based on this new low which will come out to be ₹712. This new margin will be reflected in your account on a live basis.