Monday's steep market sell-off led to ₹7.5 lakh crore worth of investor wealth being wiped out. The pain was significant in the broader markets, with the Midcap index declining over 1,200 points.

Conversations with brokers and market participants alluded to margin funding related selling by retail investors, that triggered the collapse. Vikas Khemani of Carnelian Capital also told CNBC-TV18 on Tuesday that he heard of margin funding-related selling on Monday.

But what is this margin trading based selling?

Margin trading facility is a financial tool allowing investors to buy stocks by paying only a portion of the total amount, with the broker funding the rest of the cost.

The leveraged positions are helpful in a bull market as they can boost returns, but are equally risky in volatile

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