Will Zerodha provide margin on liquid funds? (2024)

FAQs

Will Zerodha provide margin on liquid funds? ›

Yes, Zerodha provide margins on Liquid mutual funds. To learn more, see How to pledge mutual fund investments to get collateral margins?

SEBI mandates 50% of the margin required (when trading futures and selling options) to be maintained in cash. Liquidbees collateral margins are considered equivalent to cash for this purpose.

Zerodha provides up to 5 times (20% margin) leverage for intraday using Margin intraday square off (MIS) and Cover Order (CO) for equity. With ₹1 lakh, stocks can be bought or sold for intraday up to ₹5 lakhs.

Historically, these funds have generated predominantly positive returns from 4% to 10% annually. The actual return is dependent on the prevailing demand for money at the time of THE investment in the fund.

Dividends on Liquid ETFs and Liquid BeES are taxed as per the income tax slab rate of the investor. When the units are sold, the amount on which tax is already paid is treated as the cost of acquisition and the gains are then taxed under income from capital gains.

Yes, the value of liquid bees remains constant at around 1000. Dividends are daily, and all of these dividends are added together and credited to you once a month. It is credited to you as new units and not as money. So if you had bought 100 units at 1000, (Rs 1lks), held it for 1 year.

When selling holdings, 80% of the selling credit can be used for new trades. If this credit is used for intraday trade and the holdings are bought back, a margin shortfall can occur if there isn't enough margin separately available for the intraday or F&O trades.

= 2.3%. So, the higher the leverage, the higher is the risk.

The delivery margin is blocked when you sell securities (20% of the value of stocks sold) from your demat or T1 holdings. As per SEBI's new peak margin norms, only 80% of credit from selling your holdings will be available for new trades.

What is high margin penalty in Zerodha? ›

Penalty percentage of the shortfall

If the margin shortfall continues for more than 3 consecutive days, a penalty of 5% is applied for each subsequent instance of the margin shortfall. If there are more than 5 instances of shortfall in a calendar month, a penalty of 5% for every further instance of the shortfall.

They can transfer the fund to savings bank account to earn interest. However, there is hassles and transaction cost involved in transferring the money to and from trading and bank account. Investment in liquidbees eliminates the entire hassle and time. Further, it yields better return than the 4% savings account.

A liquid fund makes investments in debt products which have a maximum maturity of up to 91 days. In simple words, the liquid fund invests in debt obligations, wherein the borrower promises to repay the borrowed money (principal) within 91 days (maturity) of such borrowing.

You can access funds in your Savings Account any time you wish, whereas liquid funds are less accessible. You can get tax benefits on the interest income from Liquid Funds. Savings Account entails no risk, while liquid funds are subject to market risks.

Taxation on Liquid Funds

Investors earn dividends and capital gains from liquid funds. Investors do not pay any tax on dividend income from mutual funds. In case an investor earns a capital gain by redeeming the units of the fund at a price higher than his or her purchase price- then the capital gains are taxable.

The dividends paid out by the debt fund or liquid fund are entirely tax free in the hands of the fund investor. This is an advantage that continues and to that extent it is a better option compared to a pure debt instrument.

Liquid Bees is 100% safe as it invests only in Govt.

Can I sell liquid BeES anytime? ›

You can sell LIQUIDBEES anytime during the market hours. As per SEBIs upfront margin requirements, when you sell shares from holdings, you will get 80% of the sell proceeds on the same day.

2. Returns: Its trailing returns over different time periods are: 5.28% (1yr), 3.43% (3yr), 3.7% (5yr) and 5.84% (since launch). Whereas, Category returns for the same time duration are: 6.2% (1yr), 4.24% (3yr) and 5.08% (5yr). 3.

Margins can never be more than 100 percent, but markups can be 200 percent, 500 percent, or 10,000 percent, depending on the price and the total cost of the offer. The higher your price and the lower your cost, the higher your markup.

Generally, the majority of value investors will NOT invest in a security unless the MOS is calculated to be around ~20-30%.

Net profit margins vary by industry but according to the Corporate Finance Institute, 20% is considered good, 10% average or standard, and 5% is considered low or poor. Good profit margins allow companies to cover their costs and generate a return on their investment.

There is no upper limit to the amount of money that can be withdrawn from the trading account. Withdrawal limit is subject to availability of withdrawable balance in the trading account. To learn more, see What is the withdrawable balance?

It was started by Nithin Kamath in 2010, which was later joined by his brother Nikhil Kamath. With more than 12 million customers, Zerodha was estimated at US $2 billion (INR 16,415 crores) in 2022. India's first discount brokerage service, Zerodha allows users a unified family portfolio.

AMC charges are charged only on a demat account. As far as you are using Zerodha Kite to do trade, i.e. open only a trading account or Zerodha commodity account then you don't have to pay any AMC fees and thus can avoid these charges.

What does the error "Maximum quantity per order for Equity is 1,00,000" mean? The maximum quantity allowed per order is 100000 as per Zerodha's risk management policy. Orders that exceed these limits are rejected.

When using collateral margin to trade F&O, the shareholder must have 50% of the margin requirement in cash or cash equivalents. If not, interest at 0.035% per day will be charged on the cash component funded by Zerodha. See Will Zerodha provide margin on liquid funds?

Can I trade without margin on Zerodha? ›

NSE/BSE Equity: Zerodha has a policy of giving up to 20 times exposure on a broad spectrum of stocks; no margin is given for delivery trades. The client needs to have enough money in his trading account to take delivery of shares failing which Zerodha can cut the position.

A failure to promptly meet these demands, known as a margin call, can result in the broker selling off the investor's positions without warning as well as charging any applicable commissions, fees, and interest.

Portfolio Margin ETF Distance To Margin Call

A modest 10% to 20% leverage rate is not dangerous for most people, even factoring in that maintenance requirement can rise during times of peak volatility.

Margin capacity is calculated based on a percentage of the collateralized assets' fair market value. A general rule-of-thumb for the amount of margin capacity is to use 50% as the loan-to-value ratio.

The stockbrokers are just the agents of depositories. Your stocks are actually held by central depositories and not by the depository participants (brokers). Therefore, even if something didn't work out well with Zerodha, your stocks in the demat account are safely intact with CDSL.

Stockbrokers are required to transfer unused funds back to the client's bank account as per SEBI regulations.

These securities will be considered as cash component when trading in F&O Segment. For Instance, Mr. X has Liquidbees of ₹10 Lakhs in his holdings and wishes to trade in the Index Futures.

Lastly, margin funding works best when the churn is rapid and the yield can substantially better the proportionate cost of margin funding. That cannot happen in mutual funds, which is why margin funding is not available for the purchase of mutual funds.

Can ETF be pledged for margin? ›

Many users may have limited cash margins despite having stocks, ETFs, and mutual funds in their holdings, which can lead to missed trading opportunities. To avoid this, they can pledge their shares/ETFs as collateral margins, after a % deduction called a haircut.

For U.S. clients to be eligible for margin trading on Kraken, they will need to self-certify as an Eligible Contract Participant (ECP) as defined under U.S. law (Section 1a(18) of the Commodity Exchange Act).

OKEx is a leading cryptocurrency exchange that offers leverage trading on many cryptocurrencies, including Bitcoin, Ethereum, and others. The platform offers up to 100x leverage on some assets and is known for its advanced trading features and security measures.

Liquid Bees is 100% safe as it invests only in Govt.

They can transfer the fund to savings bank account to earn interest. However, there is hassles and transaction cost involved in transferring the money to and from trading and bank account. Investment in liquidbees eliminates the entire hassle and time. Further, it yields better return than the 4% savings account.

You can access funds in your Savings Account any time you wish, whereas liquid funds are less accessible. You can get tax benefits on the interest income from Liquid Funds. Savings Account entails no risk, while liquid funds are subject to market risks.

Zerodha provides margins on holdings of stocks, ETFs, and mutual funds. This procedure is referred to as pledging. The margin obtained can be utilized for intraday equity trading, long and short futures, and writing options (equity and currency F&O).

The cost of pledging is ₹30 + GST per instrument, irrespective of the quantity pledged. There are no charges for unpledging.

Flat ₹ 20 or 0.03% (whichever is lower) per executed order on intraday trades across equity, currency, and commodity trades.