Why am I am getting an error message saying my account has negative cash balance when placing an order?
Although you can carry forward derivative positions with collateral margins, the exchange rules stipulate that all Mark-to-Market (MTM) payments be made in cash. If your ledger balance is negative, it means that you have suffered an MTM loss, which you will have to bring in first by transferring cash without which you would not be allowed to further trade.
Allowing you to trade and take new positions despite having a negative balance will result in your derivative trades being funded by the stockbroker which is not allowed by the exchange.
To cover for this, we block new trades from happening if your cash balance is negative. We will disallow you from taking new positions in equity intraday, F&O positions (NFO and CDS). You can square off existing positions normally.