Investors bet on a resilient market, with margin funds

Bets through margin funding in many of these stocks range from ₹400 crore to ₹760 crore, according to stock exchange data.

Margin funding mostly happens during bullish phases in the as investors are confident their bets will make enough money to make profits in excess of the financing costs. Share trading through margin funding usually declines in uncertain market conditions as the likelihood of losses is higher. Brokers are also conservative while extending loans for this purpose in such times.

This time, however, there is less hesitation to bet on mid-cap stocks through margin funding. The BSE mid-cap and small-cap indices have lost 2% and 6%, respectively, since March 1. Many of the mid-cap stocks have fallen up to 40% in this period.

Agencies

Brokers said resilience in margin funding despite recent declines is a sign of confidence among investors that several of these mid-caps and small-caps will rebound after the recent correction. Some think such investors are being complacent.

"The common perception of higher returns from mid-caps compared to large caps have largely attributed investors in gravitating towards small and mid-cap stocks," said Aasif Hirani, managing director of Tradebulls Securities. "Fear of missing out (FOMO) can be one of the reasons where one can see many of the mid-cap stocks posting fresh all-time high and so that cultivates in greed mindset where investors chase the price irrespective of fundamentals."

Indiabulls Housing, which saw a 12% decline since March 1, witnessed an increase in margin funding from ₹492 crore to ₹513 crore during this period.

In a small-cap company like , which has seen a 17% decline in its stock price since the beginning of the month, there was an increase in margin funding from ₹206 crore to ₹219 crore.

Among large-cap stocks, retail investors have taken positions worth ₹846 crore through margin funding in Jio Financial, while witnessed a significant increase from ₹537 crore as of February 29 to ₹775 crore as of March 20. IRFC has margin funding of ₹680 crore, while IDFC First Bank and SAIL have nearly ₹540 crore each.

Margin funding for trading in Zee Entertainment stood at ₹ 590 crores as of March 20, slightly down from ₹653 crore earlier this month. The stock has dipped by nearly 13% since the beginning of the month.