Indian retail investors borrowed funds to buy Jio Platforms shares on the company’s first day of trading on Wednesday. According to Sina Finance, the borrowing totaled 22.228 billion rupees, or about $234.06 million, making Jio the fourth-largest stock in India by margin-financed purchases. The strong demand on its debut encouraged traders to take on greater risk.
Jio Platforms, a telecommunications and digital company controlled by billionaire Mukesh Ambani, rose 26.7% on its first trading day, reaching a valuation of about $137 billion and becoming India’s second-largest listed company. The debut-day buying came after a wave of forced liquidations linked to margin calls among Indian retail investors. By October 28, total margin trading in India’s spot market had fallen to 1.51 trillion rupees from a record 1.59 trillion rupees on September 30.
India’s Margin Trading Facility (MTF) allows traders and investors to borrow funds from brokers, with interest, to buy actively traded stocks. The National Stock Exchange of India classified Jio Platforms as a Group 1 security at listing, while the Bombay Stock Exchange placed it in the comparable Group A category, allowing margin trading from its first day. As of October 28, data from the two exchanges showed that only HDFC Bank, Reliance Industries, Jio’s parent, and BSE Ltd. had larger MTF positions. Annual interest rates for margin trading in India typically range from 9% to 18%. Dhiraj Relli, managing director and chief executive of HDFC Securities, said Jio Platforms’ margin trading position, while substantial, accounted for just 0.17% of its total market capitalization.