While trading in the stock market, one comes across jargon that has the potential for developing the perception that stock market trading is very tricky and not for the light-hearted. Well, that’s not true. With proper knowledge and comprehension, anyone can create wealth in the capital markets. One such concept is the play of leverage and margins. And, here we discuss the Top High Leverage Brokers in India.
Simply stating, we explain the concept of leverage and additionally provide a list of the popular stock brokers in India that have high exposure.
So, let’s start with the first things first.
What is Leverage? Meaning
Leverage is its essence means an advantage over something that reaps enhanced results. We all know that right? So how is leveraging done in the stock market?
Leverage simply refers to the use of borrowed capital or debt for investment. The objective of using leverage is to amplify the returns of investment significantly. It is something that a broker offers to its clients so that they can buy more stocks with less capital in hand. Using leverage increases your purchasing power.
Leverage: Example
Ok, let’s understand it with an example. A stock of XYZ company today is priced Rs. 10 and you have Rs. 1000 is your trading account. The broker you are associated with is offering leverage of 40X. So without leverage, you can buy 100 such stocks but with the 40 times leverage, you can buy 4000 stocks of the same company with the same amount in your trading account. No additional money would be required.
Investors avail this leverage via their margin accounts. A margin account is basically an account with your stock broker in which you borrow money for investments and a certain amount of interest is charged for the same. Leverage and margins are more or less the same thing: borrowing of capital for investment. However, leverage is a wider spectrum as it is done by companies for fund-raising purposes as well. Margin is just a way of taking leverage by individual investors from their brokers.
Why everyone does not prefer leverage?
So, why does everyone not take leverage then? After all, it enhances profit. Well, the first rule of investment is the higher the profit potential, the greater is the chance of risk. So when you buy 100 stocks using leverage and the price falls from Rs. 10 to Rs. 5, you will lose not 50 but 100% of your capital!
That is the reason why it is advisable to use the leverage option only if you have solid research on a given stock and a high-risk appetite. After all, it is a loan that you will have to repay whether you create profits or losses. if we were to tell you in one line, leverage is you taking a loan from your broker to invest in the stock market. It is usually done by experienced traders who are performing detailed research on the stocks and are highly optimistic about getting upward returns.
Additionally, the risk can be taken care of by the feature of Stop loss wherein you place a limit to losses according to your risk profile.
We hope the concept is clear now? So let’s move forward to some of the top stockbrokers that offer high leverage to their traders.
Best 5 High Leverage Brokers in India
Below are details of some of the top stockbrokers with high exposure:
1. Zerodha
With its headquarters in Bangalore Zerodha is one of the leading Discount brokers in the country. It was established in 2010 by brothers Nikhil Kamath and Nithin Kamath. Their Demat account services are affiliated with the CDSL depositary and they offer trading in segments like Equity, Currency, Commodity, Mutual Funds, and Bonds. Let’s have a look at the leverage offered on these products:
- Equity Intraday: 20x
- Equity delivery: No leverage
- Equity Futures: 2.5x
- Equity Options:2x
- Currency Futures and Options:2x
- Commodity:2x
- Mutual Funds and Bonds: No leverage
Ranking number one in the list of best discount brokers in India, Zerodha has made a strong mark in the stockbroking industry.
2. Wisdom Capital
Established in 2013, Wisdom Capital is a discount broker with its head based in Bengaluru. They facilitate trading in products like Equity spot, Equity futures and options, Currency F&O, and Commodity F&O. Let’s look at the exposure it offers on various products:
- Equity Intraday, Delivery, Futures, and Options: 40x
- Currency Futures and Options: 15x
- Commodity: 20x
Wisdom Capital is a depository participant of NSDL and CSDL.
3. Trading Bells
Next, we have a stockbroker established in 1992 by Amit Gupta (current CEO). The company is headquartered in Indore and deals with products like Equity, commodity, and currency for trading. It is a depository participant of NSDL. Individual leverage on products is stated below:
- Equity cash and spot: 40x
- Equity Futures and Options: 10x
- Currency Futures and Options: 10x
- Commodity futures and Options: 10x
The interest rate on the margin account is 0.067% per day. It means an interest of Rs. 6.67 is charged on the shortfall of every Rs. 1000.
4. SAS online
Initiated in 2013 by three millennials, Shrey Jain, Siddhart Jain, and Anubha, SAS online now has a user base of more than 10,000 spread accorded 700 cities. Being a depository participant of NSDL, they offer trade-in segments like Equity, Derivates, Currency, and Commodity. Looking at leverages segment-wise:
- Equity Delivery, Intraday, Future, and Options: 20x
- Currency Options and Future: 2x
- Commodity:5x
5. Tradejini
Tradejni discount broking company was established in 2002 in Bengaluru. It is a depository participant with CDSL and offers products ranging from Equities and Commodities to Mutual Funds and Bonds. Individual leverage on such products is stated below:
- Equity Intraday:20x
- Equity delivery: No leverage
- Equity Futures: 2.5x
- Equity Options: 2x
- Currency Futures and Options:2x
- Commodity: 2x
Note: The leverage values are the maximum values stated i.e. up to the point a certain broker gives leverage on a said product. It may include using additional features like Stop loss and premium plans.
High Leverage Brokers in India
While selecting a stockbroker, the most important features to look for are low brokerage and high exposure. The companies mentioned in this list adhere to those standards and facilitate seamless trading.
But remember, while leveraging may look enticing it is ardent to know its consequences in case your investments go south. It is performed with a balance of detailed research, high-risk appetite, and experience in the stock market.
Not to miss out, Best Demat and Trading Account in India
Would you try leveraging to enhance profits? Do let us know your thoughts in the comments below!