Negative impactSector
Margin Trading Is Moving Down The Market-Cap Ladder: Nithin Kamath Flags Smallcap Liquidity Risk
NDTV Profit 2 hrs ago·9 Oct 2026, 5:28 pm
Zerodha’s founder Nithin Kamath said that margin‑trading activity is shifting from large‑cap stocks to smaller‑cap and micro‑cap shares. He pointed out that these lower‑cap securities now make up roughly half of the margin‑trading book on the Multi‑Broker Trading Facility (MTF).
The shift matters because smaller‑cap stocks tend to have thinner order books and lower daily volumes. When investors use borrowed money to buy them, any sudden price move can amplify losses and trigger rapid margin calls, increasing volatility and potentially straining liquidity for both traders and brokers.
Investors should keep an eye on the proportion of margin exposure in small‑cap segments, any changes in broker‑level margin limits, and regulatory signals about tightening margin rules. A rise in forced liquidations or a slowdown in small‑cap trading volumes could signal heightened risk.
Key takeaways
- Category: Sector.
- AI reads the tone as negative (potentially bearish) for the stock.
- Assessed as a significant, market-relevant update.
Why it matters
A meaningful update worth tracking. The tone is negative — watch for downside reaction. Use the price and stock snapshot to gauge how the market is responding.
