Stocks falling due to margin trading facility :

 

Recently, many strong small-cap and mid-cap stocks have fallen sharply—even when the broader market hasn’t dropped much. This made investors wonder whether this is a “pump and dump” scenario.
But the real reason is different: Margin Trading Facility (MTF).

What is causing the issue?

Margin trading has increased massively over the last few years.
MTF allows investors to buy shares worth 3–5 times more than their actual money.
Example:
If you have ₹20,000, you may be allowed to buy stocks worth ₹1 lakh

This works perfectly if the stock goes up.
But if the stock falls 20%, the broker will automatically sell your shares to recover the amount.
This creates forced selling, which leads to sudden heavy falls in certain stocks.

Top stocks where MTF usage is very high

• CDSL

• Kaynes Technology

• Suzlon Energy

• Yes Bank
  …and more.

These stocks see higher volatility because a lot of leveraged traders are involved.

How big is this problem now?

• In 2020, MTF exposure was just ₹4,000 crore.

• Today, it has grown to ₹1 lakh+ crore, and still increasing.

• Even platforms like Zerodha want to expand MTF to more users.

This means if a stock drops quickly, many brokers sell at the same time, causing a bigger fall—especially in midcaps and smallcaps.

Reason for bse stock fall :

 

BSE also corrected sharply because CNBC reported that the SEBI Chairman may release a consultation paper to reduce F&O activity.
Since this impacts brokers and exchanges, these stocks became more volatile.