A Quick Look At Margins In The Futures Segment of the Derivatives Market in India

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If you are trading in the derivatives market, you sure know what margin requirement actually is. But, for those not trading in the futures segment, it is important to understand what margin requirement in the futures segment of the derivatives market in India actually means.

Let's take an example of margins in the future segment...

A Quick Look At Margins In The Futures Segment of the Derivatives Market
Let's say you have purchased 25 Nifty, whose expiry is on Feb 26 at the rate of 8753. The total cost of the acquisition would be Rs 218,825 (25x8753).

The total margin including gross exposure for the Nifty is currently 10 per cent. So, you need to pay almost Rs 22000 as margin for buying 25 shares of Nifty, which is slated for expiry in Feb 26.

List of shares with margins in futures segment of derivatives market

Name Market Lot Margin Margin Amount
Nifty 25 10.00% Rs 22,000
Bank Nifty 25 10.00% Rs 47,000
ACC 250 16.00% Rs 63,000
Adani Enterprises 500 19.00% Rs 66,000
Axis Bank 500 16.00% Rs 43,000
Bank of Baroda 1000 16.00% Rs 40,000
Bata India 250 16.00% Rs 51,000
Crompton Greaves 1000 16.00% Rs 29,000
Federal Bank 2000 16.00% Rs 45,000
HDIL

4000

33.00%

Rs 135,000

Hindustan Unilever

250

16.00%

Rs 69,000

IDFC

2000

16.00%

Rs 52,000

Jindal Steel

1000

35.00%

Rs 66,000

Infosys

250

16.00%

Rs 88000

We have just given the margins for Feb 23 and the same is likely to change with the change in prices of the given shares. Individuals must check with their brokers for the exact margin requirement and the list above is not exhaustive.

How Exchanges Decide The Margins For the Derivatives Segment

Fundamentally sound scrips whose chances of falling sharply are very limited will have lower margins. On the other hand scrips that are very volatile would have very high margins. From the table you can see that HDIL has a margin per cent of as much as 33%, simple because its is a very volatile scrip.

On the other hand a less volatile scrip like Infosys has a low margin requirement of just 16 per cent. It's important to study the margin requirement in the derivatives segment before you decide on buying a share. What is important is also the market lot. You cannot buy 100 shares of Infosys in the futures segment, simply because the market lot size is 250 shares. Similarly, the market lot of Nifty is 25 shares, which means you need to buy 25 shares and cannot buy one share.

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Read more about: derivatives
Story first published: Tuesday, February 24, 2015, 8:47 [IST]
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