General
How does MTF Work?
With MTF, you can buy stocks by paying a marginal amount, and ICICI Direct funds the rest. You can hold the position for up to 360 days as a leveraged position or pay back the remaining amount anytime to get the shares released in your demat account, also known as convert to delivery (CTD).
Let’s understand this with an example. Say you want to buy 1,000 shares of ABC Ltd. at ₹100 per share, but you have only ₹25,000 in your account, you can use MTF to increase your buying power to ₹1,00,000 with 4X leverage.
If price ABC Ltd. stock rises to ₹110 per share then:
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Particulars
Amount
Calculation
Invested Amount
₹1,00,000
₹25,000 (Your Money) + ₹75,000 (Borrowed Funds)
Value of shares at time of selling
₹1,10,000
1,000 shares × ₹110
Profit
₹10,000
₹1,10,000 – ₹1,00,000
Return on Investment (ROI)
40% on his initial ₹25,000 (excluding charges)
₹10,000 / ₹25,000
If price ABC Ltd. falls to ₹90 per share then:
h6
threeCol
Particulars
Amount
Calculation
Invested Amount
₹1,00,000
₹25,000 (Your Money) + ₹75,000 (Borrowed Funds)
Value of shares at time of selling
₹90,000
1,000 shares × ₹90
Loss
₹10,000
₹90,000 – ₹1,00,000
Return on Investment (ROI)
(-40%) on his initial ₹25,000 (excluding charges)
₹ (-10,000) / ₹ 25,000