Why was the account in a negative balance after the market order was executed?
When a market order is placed, it is executed at the best available price after validation. However, there may be differences between the validation and execution prices. This can happen in various scenarios. For instance, a market order for 1000 quantities of a Bank Nifty CE contract requiring a margin of ₹96,150 can be executed at a different price if the contract opens at a different price than the previous close price of ₹96.15, say ₹196.15, leading to a debit of ₹1,96,150 in Zerodha account.
Also, cash market or F&O orders placed at the market opening are validated based on the available bid-ask, but the execution can take place at an uncontrollable price. Such circumstances can result in a negative fund balance in Zerodha's account, and Zerodha may square off the positions without prior notice in such cases.
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