Half of India’s MTF book is in smallcaps; Nithin Kamath flags liquidity risks
Zerodha founder Nithin Kamath warned that small and microcap stocks account for a substantial share of India’s margin trading facility book. He highlighted liquidity risks during market downturns, when smaller stocks may face sharper selling pressure.
Nithin Kamath, the founder of Zerodha, has emphasized the significant concentration of India's margin trading facility (MTF) book in small-cap stocks, warning of the liquidity risks these companies face during market downturns or stagnation. In a recent post on X, Kamath presented charts displaying the distribution of the industry's funded amount across various market capitalization categories.
These categories include large-cap (1-100), mid-cap (101-250), small-cap (251 onwards), micro-cap (501-750), and stocks not on AMFI's list (751 and above). According to the data, small-cap stocks constitute approximately 50% of the funded amount, while large-cap stocks account for 32% and mid-cap stocks for 18%. Kamath highlighted the liquidity vulnerabilities of smaller companies, noting that liquidity tends to dwindle first in these stocks when markets experience declines or stagnation, as is currently the case.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
