The settlement cycle for equity is T+2 i.e. trade day + two trading days, as set by the exchange. This means that if you sell a stock in equity, you will receive the sales proceeds on T+2 day. Now for F&O all brokers have to report on daily basis the details of margin collected and due for all clients regarding their open positions and trades executed. While this is done, the sales proceeds which are not yet realised will be considered similar to collateral margins until they are realised. Hence, if you want to open a new position in F&O, the margin reported will be the amount of sale proceeds less the applicable haircut.

Let us understand this with an example:

Consider your trading account balance is zero. You sell 50 shares of Reliance from your investments at Rs.2400. The sale proceeds would be 80% of Rs.1,20,000 i.e. Rs.96,000. But this amount will be received by you on T+2 day. Now say you want to buy 1 lot of NIFTY FUT for Rs.1,15,000 on the same day.

Consider the applicable haircut for Reliance is 10%. So the margin reported will be calculated as 1,20,000-10% which is equal to Rs.1,08,000. Thus in this case you will have a margin shortfall of Rs.7000, on which you might be charged penalty by the exchange.