Stocks to buy today: Following disappointing US data that renewed fear of global economic recession, gold rates climbed to new life-time high of ₹56,588 per 10 gm levels in domestic market, breaching its previous record high of ₹56,562 levels. As gold rates today at new high, stock market experts have said that it would have a direct impact on those financial stocks that deals heavily in gold loan.
Market experts said that banks dealing in gold loan would benefit from this gold price rally as it would enable loan applicants to get more money on their valuables. Experts said that due to rise in precious yellow metal price, gold loan order book of financial institutions would go northward leading to improvement in margins of those financial companies.
Stock market experts went on to add that in India there are limited financial institutions that have a bulk business in gold loan. But, Muthoot Finance and Manappuram Finance have huge exposure in gold loan lending. As gold prices are expected to continue uptrend in medium to long term, they recommended positional investors to buy Muthoot Finance and Manappuram Finance stocks.
Stocks to buy after gold price rally
On stocks to buy post-gold price rally, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “As gold prices are rising and it is expected to continue its rally on fear of recession, financial stocks with exposure in gold loan business are going to benefit from this rise in precious commodity prices. However, financial companies like Muthoot Finance and Manappuram Finance would be the major beneficiaries of this gold price rally as their bulk of the business comes from gold loan lending.”
Avinash Gorakshkar of Profitmart Securities went on to add that gold rates today is at life-time high, which means loan applicants would also benefit from this precious metal rally as they will get more money against their gold mortgage. So, those planning for gold loan are expected to rush to the banks for maximising their gold loan benefit. On the other hand, lenders will benefit from the rise in their gold loan order book as they will be lending more money to the loan applicants. Hence, rising gold prices are going to benefit both lenders and borrowers.
On chart pattern signals about Muthoot Finance shares, Sumeet Bagadia, Executive Director at Choice Broking said, “Muthoot Finance shares are trading sideways with positive bias. It has strong support at ₹1,000 apiece levels whereas immediate hurdle placed at ₹1,150 levels. The financial stock may become highly bullish after giving breakout above ₹1,150 on closing basis. On giving breakout above ₹1.150 levels, the stock may go up to ₹1,300 per share levels in short term. Those, who want to add new stock in their portfolio are advised to buy this stock at current levels and keep on accumulating till the stock is trading above ₹1,000. But, one must maintain stop loss below ₹1,000 while taking position in Muthoot Finance shares.”
Sumeet Bagadia of Choice Broking said that Manappuram Finance shares are in uptrend and can go up to ₹140 apiece levels after giving fresh breakout at ₹125 apiece on closing basis. One can buy this scrip in current gold price rally maintaining stop loss at ₹105 levels and maintain buy or dips till this support is intact.
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Avinash Gorakshkar of Profitmart said that Muthoot Finance has bigger gold loan lending business than Manappuram Finance and hence one should prefer to Muthoot Finance shares if someone has long term time horizon.
Gold price outlook
Expecting gold rates rally to further continue, Anuj Gupta, Vice President — Research at IIFL Securities said, “Gold rates today climbed to record high after disappointing US data fueled fear of global economic recession. Apart from this, other triggers like inflation, Covid-19, etc. are still round the corner and hence in medium to long term too, gold rates are expected to continue its uptrend. In short term, gold prices are expected to hit ₹57,000 per 10 gm levels whereas by Diwali 2023, we are expecting gold rates to go up to ₹60,000 levels.”
So, those stock market investors who have a medium to long term perspective, they can also think of adding Muthoot Finance and Manappuram Finance shares in their stock portfolio
