The performance of Indian markets in the top 10 markets of the world has been very poor. Despite this, domestic investors are expected. Foreign institutional investors are constantly selling in Indian markets. However, it has not affected the market much, the credit goes to domestic investors. Domestic investors are investing in shares in direct and indirect ways.
Domestic investors invest more than FII in top companies
Their investment in top 500 companies has been higher than the investment of Foreign Institutional Investors (FII) by continuous investment of domestic investors. On the other hand, investment has come down to a 13 -year low. Record investment is being made in mutual funds. SIP investment has reached a new height. Regular investment of retail investors has a big hand in this.
Investments in shares are also increasing through margin funding
The investment of retail investors has also increased significantly through the path of margin funding. According to a new CNBC report, the amount of live employment of Indian investors has increased to about one lakh crore rupees. This amount has been 13 times in the last five years. In late 2020, margin funding book of brokerage firms was just Rs 7,500 crore.
Loss of loss in margin funding when declining
The increase of margin funding is generally considered worrying. The reason for this is that these investors are at risk of losing a lot when the market declines. In such a situation, they have to liquidate their position. This increases the fall pressure on the market. But, if seen in terms of size of the Indian market, the margin book does not seem much.
Brokerage firms are seen in margin funding
Brokerage firms are promoting margin funding accounts after recent decrease during expiry days every week. Margin funding is a source of income for brokerage firms. This not only earns them from brokerage fees on delivery in cash stock, but they also earn from the interest received on the money they lend to the clients.
Investors find better than futures position
Margin funding is more beneficial for investors than the conventional futures position. Investors in margin trading can maintain their holding for a long time without rolling their positions every month. Bluechip stocks such as Reliance Industries, TCS and Tata Motors are the most live raised stocks in margin trading. Apart from this, investors have also bet on HAL, BEL and Majhgaon dock shipbuilders.
Brokerage firms giving loans on 7.99 percent interest
Margin funding can be understood with the help of an example. Suppose someone wants to invest Rs 10 lakh in the shares of HDFC Bank. For this, the client will have to pay a margin of Rs 2.5 lakh, while the bouquet will give the remaining 7.5 lakh rupees. Investors have to pay interest on this debt. Mirai Asset Management Emstock is financed on 7.99 per cent interest to high value traders, while retail participants have to pay up to about 9 per cent interest.
1 lakh crore not more in terms of Indian market size
Margin trading is generally considered a tool used in the bullish market. However, Indian investors are using it strategic to create positions in high quality stocks. Margin trading book of one lakh crore rupees is more at first sight, but it cannot be called worrying in view of the size of the Indian market.