October 24, 2025
Finance

If You Invested ₹1 Lakh in Reliance Industries Using Leverage

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Investing in the stock market can often feel daunting, especially with the concept of leverage hanging over it. But imagine the possibilities: if you invested ₹1 lakh in a stock using leverage, your potential gains could multiply significantly. Let’s dive into some concrete examples to clearly illustrate how leveraged investing can amplify returns.

Leveraging Your Investments

Leverage allows investors to borrow funds to increase the size of their investments. This means you can control a larger position than the original capital you put up. For instance, if you’re using a 2:1 leverage ratio, your ₹1 lakh investment can effectively become ₹2 lakh in the market.

Example 1: Reliance Industries Limited

Take Reliance Industries Limited (RIL), a powerhouse in the Indian market. Suppose you invest ₹1 lakh in RIL at a price of ₹2,000 per share. This means you could buy 50 shares. Now, with leverage, if you control ₹2 lakh worth of shares and the price of RIL increases by just 10% to ₹2,200, your shares would now be worth ₹2.2 lakh. However, your initial outlay was still just ₹1 lakh. After repaying the borrowed amount of ₹1 lakh, your profit stands at ₹20,000, yielding a stunning 20% return on your original investment rather than the standard 10%.

Example 2: Tata Consultancy Services (TCS)

Now, let’s consider Tata Consultancy Services (TCS). Imagine investing ₹1 lakh using leverage to purchase ₹2 lakh worth of TCS shares at ₹3,500 each, allowing you to buy about 57 shares. If TCS rises to ₹4,000 (which is approximately a 14% increase), your shares are now valued at ₹2.28 lakh. After recalculating the borrowed amount, you’d have a profit of ₹28,000, translating to a 28% return on your invested capital.

Example 3: HDFC Bank

Lastly, let’s explore HDFC Bank. Suppose you put ₹1 lakh into HDFC stocks with leverage, bringing your total investment to ₹2 lakh at a share price of ₹1,600. With the shares appreciating to ₹1,850—a 15.6% increase—you’d now have shares worth ₹2.2 lakh. After settling up, you’d pocket a profit of ₹20,000, which is a hefty 20% return.

The Takeaway

Using leverage can significantly enhance your potential returns, provided the market moves in your favor. While the allure of increased profits is undeniable, it also necessitates careful consideration of market dynamics. Remember, with great power comes great responsibility—understanding the market and timing your entries and exits become crucial in leveraged investing.

For Indian retail traders eager to amplify their equity investments, leverage presents a compelling tool that, when used judiciously, can lead to substantial financial gains. The key is to stay informed, be strategic, and remain vigilant. Happy trading!