Could India’s Retail Investors Fall Into The Same Debt Trap As Korea?

Korea shows what too much borrowed money can do to a market. Over 1.2 million leveraged accounts hit margin calls, and around 360,000 were sold off by brokers, wiping out their savings. One student turned about 13,500 dollars into a fifteen fold gain using heavy margin, then lost nearly all of it in four weeks.

India worries some watchers for a similar reason. Its market has been among the world’s weakest this year, yet retail investors are taking on debt to buy shares at high prices. Buying stocks fully online has made borrowing very easy, so brokers can push credit and savers can grab it with a few taps on a screen.

There is a reason people reach for this. With prices expected to rise above 9 percent, a deposit earning only 6 percent feels like a losing bet. But leverage cuts both ways, because it grows losses as fast as gains. Korea’s pain is a plain warning. Borrow to invest only with money you can afford to lose.