The stock market is witnessing a sharp fall in some of the mid-cap stocks which the media is attributing to margin calls.
According to website Investopedia, margin call is “a broker’s demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin.”
So when a margin call happens, there is a danger of a cascading effect.
Some of the stocks affected are as follows: Tulip Telecom declined by 35 percent, SRS Ltd by 17.77 percent, Nitin Fire Protection by13.62 percent, Radico Khaitan by14 percent, Pipavav Defence Offshore by 19 percent, Everonn Education by 20 percent.
BSE mid-cap index was down 1.3 percent. In comparison, the Sensex was down 0.25 percent.