Retail Investors Drive Margin Trading Funding to Record High in August Despite Market Haze

Retail investors' appetite for margin trading funding remains strong despite the recent market haze, with the total MTF book surging to a record high of ₹96,000 crore in August. This reflects continued risk-on sentiment, with brokers funding the rest of the purchase by charging an interest rate of 9-15% per annum. Most traded stocks include HAL, TCS, and Infosys.

Margin Trading Funding (MTF) in India reached a record high in August, surging to ₹96,000 crore, indicating strong investor confidence despite recent market fluctuations. This surge reflects a growing appetite among retail investors to borrow funds for stock market investments [1].

The total MTF book stood at ₹96,000 crore in August, up from ₹88,000 crore at the end of June. This growth is notable, considering the market's recent volatility. The MTF book had declined to ₹71,000 crore in March following a market slump but resumed its upward trajectory in April with the market rebound.

Brokers provide leverage of 3-4 times the margin amount, with interest rates ranging from 9-15% per annum. Investors can buy shares by paying a fraction of the total value, with brokers funding the rest. Most traded stocks using borrowed funds include Hindustan Aeronautics (HAL), Tata Motors, Tata Consultancy Services (TCS), and Infosys.

HAL is the most traded stock with borrowed funds, with a combined amount financed of about ₹1,373 crore. Tata Motors and TCS have funded bets worth ₹1,337 crore and ₹1,249 crore, respectively. Jio Financial Services and Reliance Industries also have outstanding MTF positions of over ₹1,000 crore each.

The surge in MTF book can be attributed to several factors, including regulatory actions that may have boosted demand for margin funding over futures and options trading. The MTF facility is considered easier for retail investors to understand compared to derivatives, making it a popular high-risk, high-conviction tool for short-term investments.

References:
[1] https://m.economictimes.com/markets/stocks/news/retail-investors-drive-margin-trading-funding-to-record-high-in-august-despite-market-haze/articleshow/123129144.cms