This looks simple and straightforward.
1 Like
I was using Mirae Assets broker (Mstock) for leverage last year. They are providing 7-9% interest on margin funding to own stocks and upto 3-5x leverage. You can hold the stocks long term with leverage.
Another option is to use Futures for leverage. You have to roll over the future on monthly basis. That will incur rollover cost of 5-10%/(per year) (Depends on the scrips & volatility). You can get up-to 5x leverage on this.
Another option is to use Options (Synthetic future) and roll over the options on monthly basis. This is has some advantage over Futures as transactions cost is low for this. Also you can hedge the postions. Here roll over cost depends on the strategy you are opting for. Leverage also depends on the strategy that you are going for. You can even get 50x leverage on this. But 3x-5x is safe for adjustments & fire fighting if direction is aganist you. Disadvantage is that many stocks are ill-liquid. Best for Indexes & high volume stocks like HDFC, TCS, ITCâŚetc.
1 Like
To be honestâŚvery honestâŚi been reading this thread from begining over and over againâŚdidnt understand a thang !
Say for exampleâŚone has hypothetical 1 cr pfâŚsay all is small capâŚmarket tumblesâŚpf loses -20% from topâŚand one wants to do this thingyâŚhow much one will get ?..how would the process pan out, how much time will it take ?..(i just get that there would be some interest) 
In case any experienced bloke may spare some time to explain ? 
1 Like
I donât know about banks but brokers like Zerodha have a list of securities that they accept as collateral.
Here is the list of securities that Zerodha accepts.
Maybe banks have a different risk management approach, and they lend even if the stocks are small cap, perhaps at a higher interest rate.
And as the value of the collateral decreases, there will be notices to add funds to the extent of the value depreciation to maintain a threshold.
A lot of things are explained in the link I have given in the previous post.
2 Likes
But the Money we receive after pledging the stocks can only be used for Future and option transaction that too require 50% actual cash component
In short if I pledge stock worth Rs. 100 after haircut (usually 20-25% for most of the stocks - can be checked according to stocks in the list) I will get Rs.75. For using this Rs.75 I need to deposit another Rs. 75 cash, then I can trade in F&O for Rs. 150
I havenât availed any kind of such facilities, so my understanding could be wrong.
I think, pledging and loan are different things. So what the money is used for does not matter.
From Zerodhaâs FAQs.
Loan Against Securities (LAS) is a facility wherein stocks and mutual funds in the demat account can be pledged to avail loan against it. LAS is similar to a loan against gold or a loan against property.
I have recently watched a great interview. The fund manager was saying he has stopped accepting any more funds and he keeps getting requests for being allowed to invest. And then he said, he may start accepting when the market falls, but then people would not come forward to invest.
If the market falls really big, it may be time to test my theory of taking leverage for investing in a big way.
2 Likes