Gold loan NBFC stocks remained under pressure in Wednesday’s trade on June 10, as the continued decline in gold prices dragged the counters to multi-month lows, eroding significant market value.
Shares of Manappuram Finance crashed 5.6% in trade to ₹290 apiece, marking their lowest level in over a month, while shares of Muthoot Finance dropped 4% to an eight-month low of ₹2,870 apiece.
These stocks, which emerged among the top performers of 2025 on the back of a record-breaking rally in gold prices, are now caught in a bearish phase and struggling to regain momentum.
The sharp correction in bullion prices has raised investor concerns that a sustained decline in gold prices could lead to higher non-performing assets (NPAs) for gold loan financiers and weigh on their lending prospects.
A steep fall in gold prices could force lenders to offer lower loan amounts against the same quantity of pledged gold, potentially slowing loan disbursements. Another key concern is that if gold prices continue to decline, borrowers may be required to provide additional collateral or repay a portion of their loans, which could result in higher NPAs.
While lenders can auction pledged gold if borrowers fail to meet margin requirements, such measures could increase operating costs and put pressure on profitability. Falling gold prices also tend to reduce the attractiveness of gold loans, potentially dampening fresh demand.
From its record high of ₹4,149 apiece, Muthoot Finance shares have declined 31%. For 2026 so far, the stock is down 24%, marking a sharp reversal from the 78% rally witnessed in 2025. Despite the recent correction, the stock had delivered positive returns in each of the last three calendar years.
Meanwhile, Manappuram Finance shares are trading 13% below their recent high and are down 6% on a year-to-date basis. Like its peer, the stock also posted positive returns over the last three annual years.
Gold prices crashed another ₹3,500 on MCX, down ₹31,700 from peak
Rising tensions in the Middle East, which have heightened expectations of a US Federal Reserve rate hike in 2026, are making gold less attractive to safe-haven buyers and dragging prices to multi-week lows.
After dropping ₹2,341 per 10 grams in the previous session, the near-month gold futures contract on MCX plunged another ₹3,383, slipping below the ₹1.50 lakh mark to ₹1,49,060 per 10 grams. The latest decline dragged prices to their lowest level since early May, falling below pre-duty-hike levels.
From its record high of ₹1,80,779, the yellow metal has now corrected by ₹31,720.
The United States on Tuesday launched strikes against Iran after US President Donald Trump said Tehran had shot down a US Apache helicopter in the Strait of Hormuz. Iran’s Revolutionary Guards said they retaliated with attacks on a US base in Jordan and 21 other targets across the Gulf on Wednesday.
Following the latest escalation, crude oil prices recovered part of their previous day’s losses, keeping expectations alive that interest rates could remain higher for longer. While gold is traditionally viewed as a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
