Shares of Manapurram Finance Ltd. and Muthoot Finance Ltd. gained on Friday after international gold prices hit a new record high. Higher prices of the yellow metal boost loan growth for gold loan companies and improve the loan-to-value ratio.
The LTV is a financial metric that compares the value of a loan to the value of the asset that secures it. Lenders often use it to assess the risk of a loan.
Shares of Manapurram Finance advanced as much as 5.3% intraday to Rs 216.5 apiece. On the other hand, Muthoot Finance share rose 4.6% intraday to an all-time high of Rs 2,078.75.
Gold rose to a record high of $2570.3 per ounce, building on a surge of nearly 2% a day prior as the US dollar extended declines ahead of an expected Federal Reserve rate cut next week.
Prices also received a boost following the euro's increase against the dollar, as investors reduced their expectations for further rate cuts by the European Central Bank, which had lowered rates on Thursday.
Gold prices have soared by 25% this year, driven by the Fed's shift towards monetary easing. Central bank purchases, coupled with strong demand for safe-haven assets amid ongoing conflicts in the Middle East and Ukraine, have fuelled this rise. Additionally, retail investor interest in gold is on the rise.
In the domestic market, gold futures for October delivery on the Multi Commodity Exchange Ltd. were up 0.54% at Rs 73,215 per piece.
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