How Market Volatility Impacts Your LAS

Understanding how market fluctuations affect your Loan Against Securities (LAS) can help you protect your investments and avoid surprises. When markets turn volatile, the value of your pledged mutual funds may dip—bringing margin calls and unwanted stress.
But with the right approach, you can stay invested, stay funded, and stay in control.
Key Takeaways
- Market volatility can directly impact your LAS, especially through margin calls.
- Staying invested during swings is possible — but requires strategy and smart safeguards.
- Understanding loan-to-value (LTV) and margin triggers is crucial to avoid forced liquidation.
What Happens to LAS During Market Swings?
A volatile market doesn’t just affect your investments - it can impact your loan, too.
What is market volatility?
Market volatility refers to the rapid ups and downs in asset - prices in this case, mutual fund NAVs. You might have seen your fund value change by ₹5,000 in a day. That’s volatility.
How is volatility measured?
Tools like the India VIX index or daily Nifty 50 swings reflect market fear and sentiment. A higher VIX generally means more unpredictability ahead.
How does volatility affect LAS value?
Since LAS is issued against your mutual fund units, a drop in NAV reduces the value of your pledged collateral. If this falls below the minimum loan-to-value (LTV) threshold, you risk a margin call.
What are margin call triggers in LAS?
Let’s say you’re allowed 50% LTV. If your fund value drops from ₹2 lakh to ₹1.6 lakh, your outstanding loan might suddenly exceed the limit. That triggers a margin call. You’ll be asked to either repay or pledge more units.
Why do lenders act fast during swings?
Lenders have to control risk in real time. A sharp market dip can shrink your collateral fast. They might send instant alerts, and you may need to act within 24-48 hours to avoid liquidation of your funds.
How Can You Protect Your LAS in Volatile Markets?
You can stay ahead of volatility with a few smart tactics.
Can I avoid margin calls?
Yes, by pledging more units than required (over-pledging) and not maxing out your approved credit limit. Keep some cushion between your borrowing and your maximum eligibility.
What role does portfolio selection play?
Choose funds with stable performance — low-beta or large-cap funds are safer bets during swings. SIPs are less risky than lumpsum investments when markets are unpredictable.
How does real-time monitoring help?
Track your NAVs regularly. Use alerts, calculators, and dashboards to keep an eye on your LTV. Quicklend’s dashboard notifies you early so you can take action.
What Should You Do if a Margin Call Hits?
If you receive a margin call, don’t panic. You have options to manage it.
Should you repay or top up?
You can either repay a part of the loan or pledge more mutual fund units. For instance, if you’ve borrowed ₹1 lakh and your fund value drops, adding ₹50,000 worth of units might restore balance.
What if you don’t act in time?
Lenders may liquidate your pledged funds to cover the shortfall. This could disrupt your investment plans and lead to exit loads or taxes.
Can volatility be an opportunity too?
If you’re financially confident, you can draw from your LAS when markets dip—to invest at lower prices. Just be cautious: market timing is risky and not for everyone.
Conclusion
Market volatility and Loan Against Securities go hand in hand — but that doesn’t mean you have to risk your investments. With the right buffer, portfolio choices, and a flexible partner like Quicklend, you can manage short-term market swings smartly.
You stay invested, borrow only what you need, and respond quickly to market changes. That’s how lending should work.
Explore more smart lending options and financial guides at Quicklend Learning Center.
This is general guidance. For personalized loan advice, contact our advisors.