Nithin Kamath, founder of Zerodha, has highlighted the growing concentration of India’s margin trading facility (MTF) book in small-cap stocks, pointing to the liquidity risks these stocks face when markets fall or move sideways.
In a post on X, Kamath shared charts showing the distribution of the industry’s funded amount across stocks classified by market capitalization. According to the data, small-cap stocks account for around 50% of the funded amount, while large-cap stocks make up 32% and mid-cap stocks account for 18%.
