An investor with ₹20,000 can buy 40 shares outright at ₹500 each. Using MTF to borrow ₹60,000, they could buy 160 shares. If the stock rises to ₹550 in 60 days, they can sell for ₹88,000. After repaying the ₹60,000 borrowed and approximately ₹1,500 in interest (assuming 15% interest rate p.a.), net profit works out to be ₹6,500, a 32.5% on capital. Without leverage, the same 10% price move would have earned exactly 10%.
