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Time to book profit on NBFC stocks?

Q2 earnings look promising; experts believe high valuations after recent rally limit the risk-reward

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Compass Nbfc

Hamsini Karthik 

If you had bought shares of non-banking financial companies (NBFCs) at the start of 2016, you would have booked at least 10 per cent gains, twice the 5.6 per cent gains of the S&P BSE Sensex this year. NBFC stocks such as Bajaj Finance, Cholamandalam Investment and Finance, Shriram Transport, and Muthoot Finance returned between 35 and 90 per cent this year.

At the beginning of 2016, there was shift in preference from banks to NBFC stocks. Interest rate on bonds coming down helped them reduce their cost of funds. While some fundamentals haven't changed, particularly loan growth and ...

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First Published: Mon, October 17 2016. 21:36 IST
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