Mumbai: Retail investors‘ appetite to borrow to bet on shares remains undeterred despite the recent haze in the market. Money borrowed under brokers’ Margin Trading Funding (MTF) facility-a system allowing investors to borrow to buy shares they cannot afford – surged to a record high in August, highlighting the continued risk-on sentiment.

The total MTF book stood at above ₹96,000 crore in August against nearly ₹88,000 crore at the end of June. In September 2024 – when the bull run was at its peak – the MTF book was at around ₹85,400 crore.

“The record high levels in the MTF book reflect strong investor sentiment, indicating confidence after we faced a prolonged correction since September, which has now started reversing,” said Suresh Shukla, chief business officer, SBI Securities.

In margin funding, investors buy stocks by paying up only part of the total value, while brokers fund the rest of the purchase by charging an interest rate. Most brokers charge interest rates in the range of 9-15% per annum for MTF.

If an investor buys a share worth ₹100 under the MTF facility, she will need to bring in only 20% of the transaction value, or ₹20, while the remaining 80%, or ₹80, is covered by the brokers. Investors could also pledge their shares in their demat accounts as collateral as part of the margin funding.

Brokers usually provide a leverage of 3-4 times the margin amount. Regulatory actions in the past year discouraging retail investors from trading in futures and options may have boosted the demand for the margin funding facility. In last three months, the MTF book surged 33% while the benchmark Nifty gained 1.3% in the same period.”MTF is easier to comprehend for retail investors compared to F&O trading,” said Ashish Nanda, president & digital business head, Kotak Securities. “It is a high-risk high high-conviction tool for short term, albeit less risky than derivatives.”After a record-breaking rally that peaked in September, the MTF book had declined to ₹71,000 crore in March following the market slump. It resumed its upward trajectory in April in the face of the market rebound.

Hindustan Aeronautics (HAL) is the most traded stock with borrowed funds from margin trading, with a combined amount financed of about ₹1,373 crore. Tata Motors and Tata Consultancy Services (TCS) also have funded bets worth ₹1,337 crore and ₹1,249 crore, respectively.

Jio Financial Services and Reliance Industries have an outstanding MTF positions of over ₹1,000 crore each.

After a record-breaking rally that peaked in September, the MTF book had declined to ₹71,000 crore in March following the market slump. It resumed upward trajectory in April in the face of the market rebound.

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