Retail investors borrowed 22.28 billion rupees ($234.06 million) to buy Jio Platforms shares on Wednesday, making it the fourth-largest margin-funded stock in the country, as strong listing-day demand encouraged traders to take on more risk.
Shares of billionaire Mukesh Ambani's telecom and digital company jumped 26.7% in debut trade, valuing it at around $137 billion and making it India's second-largest listed company by market capitalisation.
The heavy first-day borrowing in Jio Platforms comes weeks after a wave of retail margin-call liquidations cut India's overall cash market margin trading book to 1.51 trillion rupees as of October 28 from a record 1.59 trillion rupees on September 30.
"Naturally, (Jio Platforms) would draw interest from investors across the board. In that sense, it was bound to become eligible ... sooner or later," said Deven Choksey, managing director of DRChoksey Finserv.
The margin trading facility (MTF) is an exchange-approved product that allows traders and investors to borrow money on interest from brokers to buy actively traded stocks.
The National Stock Exchange of India classified Jio Platforms under Group 1 securities on debut, and the BSE under a similar Group A category, making the stock eligible for margin funding from its very first session.
Only HDFC Bank, Jio's parent Reliance Industries and BSE Ltd have larger MTF positions, according to data from the NSE and the BSE as of October 28.
A section of investors believes Jio Platforms can give a higher return than the cost at which they are borrowing money, said Ashish Nanda, president and digital business head at Kotak Neo, pointing to the stock's strong debut in the MTF book.
The interest rate on margin trading in India typically ranges from 9% to 18% per annum.
While Jio Platforms' MTF position may sound substantial, it amounts to just 0.17% of its total market cap, said Dhiraj Relli, managing director and CEO of HDFC Securities.