Retail investors borrow ₹2,227 crore via MTF to buy Jio Platforms shares on listing debut

The MTF book on the NSE grew by ₹2,337 crore on 28 October from a day before, of which 93% was directed towards financing purchases of Jio Platforms shares, according to exchange data. Jio Platforms listed at a 27% premium to its issue price of ₹1,119. The strong listing appears to have jacked up investor demand, with many turning to MTF to gain exposure to the stock on the same day. HDFC Bank was the most heavily funded stock on 28 October, with brokers financing purchases worth ₹3,073 crore on the NSE.

Reliance Industries and BSE Ltd were next with ₹2,876 crore and ₹2,433 crore in broker funding, respectively. Jio Platforms ranked next, attracting ₹2,182 crore in financing on its debut day. The NSE has the majority market share in terms of the MTF book. The NSE placed Jio Platforms in Group 1 on listing day, after which brokers followed suit by offering MTF on the stock. Group 1 securities are classified as highly liquid stocks.

MTF-funded buying of ₹2,000 crore in a stock is significant, considering that the average daily cash market turnover is about ₹60,000 crore, making it equivalent to 3-4% of the market’s daily turnover, said Shai Coelho, founder at Vtrender, a platform for traders. “For a newly listed stock, this reflects strong bullish interest among retail investors and in a relatively weak market with limited bullish opportunities, this also indicates that investors are willing to take leveraged bets on the stock,” Coelho said.

On day 1, the Jio Platforms stock had a deliverable quantity of 71%, meaning that for every 100 shares traded, 71 were delivered. This shows that the majority of individuals bought the stock for the long term. After closing at ₹1,417 on 28 October 28 with a gain of 26.81% from its issue price, the stock fell 2.5% to a low of ₹1,381 on the next trading day, indicating that some individuals flipped the stock to book a profit.

However, the stock recovered and closed at ₹1,421.6. MTF allows investors to buy stocks by paying a portion of the total value, while the broker funds the remaining amount. The investor pays interest on the borrowed amount. If the stock declines, they may have to provide additional funds to meet the margin requirements. “MTF works well when the stock continues to move upwards. However, it can become problematic when the stock starts declining sharply. A correction of 1-2% may not make a significant difference. But if the stock falls by 5-6%, it can create additional margin pressure,” said Coelho.