There aren’t many takers for stocks of non-banking finance companies (NBFCs), but Manappuram Finance and Muthoot Finance are outliers with their stocks more than doubling from March lows because gold prices have rallied exponentially during this period. Primary market price for gold may be firming up.
But for lenders, the auction rate or secondary market price is more critical. This is the price at which they liquidate the stock in case of defaults and this price is often at a significant discount to primary market rates. In other words, gold financiers lend based on market ...
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