The single biggest change to Indian retail trading in the last five years has been the SEBI peak-margin framework. Brokers can no longer offer 20x, 50x or 100x leverage on intraday equity. If you started trading after 2021 you’ve never seen the old regime — but the culture of “MIS = massive leverage” still lingers, and beginners get hurt by assuming old YouTube videos apply.
This guide explains what intraday margin actually costs you today, in plain language.
The two products: MIS vs CNC
Every Indian broker offers at least:
- MIS (Margin Intraday Square-off) — leveraged, must be closed before the auto-square-off window. If you don’t, the broker squares you off automatically (usually 3:15 – 3:20 PM).
- CNC (Cash & Carry / Delivery) — full payment up-front, no leverage, share moves to your demat on T+1.
There is a third — CO / BO (Cover Order / Bracket Order) — but most brokers have deprecated these post-2021. Stick to MIS for intraday.
If you’re still deciding which product fits your style, read intraday vs delivery trading in India.
How peak margin works (the short version)
Pre-2021, brokers calculated your end-of-day margin and let you use far more leverage during the day. SEBI’s peak-margin rules changed that.
Now the exchange takes four random snapshots of every broker’s client positions during the day. The highest margin usage at any snapshot must have been fully covered. If you used more leverage at any point and were short by even ₹1 against the snapshot, the broker is penalized — and they pass that penalty to you.
Net effect: brokers cannot quietly extend you intraday leverage anymore.
Equity intraday margin: VAR + ELM
For cash-segment intraday equity (MIS):
- VAR = Value at Risk margin (volatility-based, varies per stock).
- ELM = Extreme Loss Margin (additional buffer).
Total upfront margin for an MIS equity trade is roughly VAR + ELM. For most Nifty 100 names this comes to 15% – 25% of trade value. So effective leverage is around 4x – 6x — not the old 10x – 20x.
For volatile mid/small caps, VAR + ELM can be 40% +, meaning you only get 2x – 2.5x.
F&O intraday margin: SPAN + Exposure
Futures & options intraday uses:
- SPAN margin — calculated by exchange risk engine based on scenarios.
- Exposure margin — additional buffer.
Total = SPAN + Exposure. There is no “intraday discount” any more. The MIS and NRML (overnight) margins are identical for F&O during the day; the only difference is when you must close the position.
This is why deep OTM option selling is no longer the easy income stream it was in 2019 — the margin for short options is real.
What gets blocked when you place a trade
When you submit an MIS order, your broker blocks:
- VAR + ELM (or SPAN + Exposure for F&O).
- MTM (Mark-to-Market) as the trade moves against you.
- Charges + STT estimate for the round trip.
If your free cash falls below the requirement during the day, you’ll get a margin call notification. Don’t ignore it. Either add funds or close part of the position.
What happens on auto square-off
Most brokers start MIS auto square-off around 3:15 – 3:20 PM. If a position isn’t closed by then:
- The broker fires an exit at market price.
- You bear the slippage, plus a square-off charge (typically ₹20–₹50 per executed order).
- You also pay normal brokerage + STT.
If you wanted to keep the position overnight, you should have converted MIS → CNC before the cut-off and if you had the full delivery margin in your account. Converting to “save” a losing trade is rarely a good idea — see intraday vs delivery trading in India.
Cash segment: short delivery = auction risk
In the cash segment, you can buy and sell the same stock intraday on MIS — that nets out by EOD with no auction risk.
But if you sell a stock you don’t have in demat and you don’t buy it back by 3:15 PM, you’ve short-delivered. On T+1 the exchange runs an auction to procure the share, and the price difference (often punitive) is debited from your account. Avoid this.
Practical leverage you can actually use
| Segment | Old leverage (pre-2021) | Today (peak margin) |
|---|---|---|
| Large-cap equity MIS | 10x – 20x | ~4x – 6x |
| Mid-cap equity MIS | 5x – 10x | ~2x – 4x |
| Stock futures | 5x – 7x | ~5x (no real change) |
| Index futures | 6x – 8x | ~7x |
| Short options | Tiny margin | Full SPAN + Exposure |
If you remembered older numbers — update your mental model.
How much leverage should you actually use?
Even when the broker lets you take 5x, you usually shouldn’t.
- A 1% adverse intraday move on 5x leverage = 5% account drawdown.
- Two such trades in a row = 10% down — most retail accounts emotionally tilt at 10%.
A safer ceiling for most retail traders:
- 2x – 3x effective leverage on equity MIS.
- 1x – 2x notional on index F&O.
- Position-sized by stop distance, not by margin available — see the position-sizing formula in the beginner’s guide.
How the IntradayEdge dashboard ties into margin
The dashboard shortlist is signal-based — it tells you what to look at, not how much to trade. Your margin and position size are still your decision.
For the wider context of how AI-driven shortlists fit in, read AI stock analysis in India.
FAQs
Can I still get 10x intraday leverage anywhere legitimately? No. Any broker advertising “20x intraday margin” today is either misleading you, talking about F&O, or operating outside SEBI compliance. Walk away.
What is “Peak Margin Penalty” on my contract note? It’s a charge passed to you by the broker when your position briefly exceeded the available margin at one of the random exchange snapshots. Even ₹1 short can trigger it. Always keep a small buffer.
Are stock SLB margins different? SLB (Securities Lending and Borrowing) is overnight-style and operates under separate rules. Most retail traders don’t touch SLB.
Next, see how this changes when you trade positionally instead of intraday: Intraday vs delivery trading in India.