You will need to start at the First Step Grace.

You need to have Rotten Stray Ashes in the pouch.

Here is the location of Rotten Stray Ashes.

And get teleported to Sellia crystal tunnel.

After that, exit the cave and get the Rotten Stray Ashes.

Activate nearby Sellia Under Stair Grace.

Ride north to the castle front gate.

And jump through the storm gate to the other side.

You have to follow a cobble road to the second castle.

Run inside the castle and activate grace.

After that, traverse the mist up ahead.

Hold Triangle and select Rotten Stray.

You have to keep the shield up (hold L1) and dodge (0).

Hit Margit's tail to distract him.

And then wait for Rotten Stray to bite Margit.

Margit is Poisoned, so you need to runaway.

Note that Margit’s health is slowly dropping.

Once Rotten Stray dies, you have to avoid Margit.

Try to back away to another side.

You have to avoid hits by dodging to the left.

Repeat and wait until Margit Dies.

When Margit Dies, you will get the Talisman pouch.

Make sure to activate unlocked Grace.

New grace Called Margit the fell omen.