A haircut is the percentage deducted from the market value of your pledged shares to arrive at the actual margin you receive. It is not a fee, it is a risk adjustment to account for potential price movements in the pledged stock.
Example
Priya pledges shares worth ₹1,00,000. The haircut on that stock is 10%.
- Value of holdings: ₹1,00,000
- Haircut (10%): ₹10,000 deducted
- Margin she receives: ₹90,000
Why does the haircut vary?
Each stock has a different haircut based on its volatility and liquidity. A large-cap, actively traded stock like HDFC Bank will have a lower haircut than a small-cap or thinly traded stock. The more stable the stock, the more margin you receive against it.
To check the haircut on any stock before pledging, use the StockPlus Leverage Calculator at samco.in/stockplus. The haircut percentage is also visible stock-by-stock directly on the pledge screen in Samco Star Backoffice when you go to Portfolio → Pledge / Unpledge.
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