Investors seem to have taken a sudden liking to shares of small-ticket finance and leasing companies, thanks to widening spreads between lower borrowing costs and higher lending rates. According to analysts, easing of credit lines has resulted in finance and leasing companies borrowing money at lower rates and lending at significantly higher lending costs.

The rate differential between borrowing and lending is always steady in the range of 7-15%. And even if the cost of borrowing comes down, these players usually do not pass over the benefits to loan consumers. So, even if there is a rate cut on borrowing, small-ticket finance companies stand to gain immensely.

Shares of Cholamandalam DBS, Escorts Finance and Ceejay Finance ended 19.8%, 1.2% and 3.8% higher at Rs 32, Rs 2.46 and Rs 9.20, respectively while Shriram Transport Finance Company, Sundaram Finance and Mahindra & Mahindra Financial Services closed the day 1.1%, 1% and 2.7% lower at Rs 182.20, Rs 168.10 and Rs 201.10, respectively.

Brokers back with multi-bagger ideas

After a lull for more than a year, broking firms have resumed their strategies to sell potential multi-bagger ideas in mid-caps to retail clients.

Now that the market has begun to look up, these stories are slowly beginning to find takers. If the Sensex climbs another 1,000 points, you could see a stampede for some of these stocks. No matter how steep the losses suffered in mid-cap stocks over the past year, retail investors seem certain of one thing.

The quickest way to recoup losses is by betting on low-priced stocks, and betting that they will treble or quadruple from current levels. Never mind where the global or domestic economy is headed.

What is giving retail investors the added confidence is the fact their belief that they have little to lose by buying at current levels. Shares of abrasive, lighting system, poultry firms to name a few, are the flavour of the season.

Contributed by Deeptha Rajkumar & Reena Zachariah
source: Economictimes

Tags: analysts, mahindra & mahindra, multibaggers, sensex, shares, stocks

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