With precious metals and commodities experiencing a strong rally, market expert Sameer Dalal advocates for a cautious and selective investment approach, favoring gold finance companies over metal producers. The CEO of Natverlal & Sons Stockbrokers shared his insights with ET Now, emphasizing that elevated gold prices create favorable conditions for gold loan companies while much of the upside in metal stocks appears already factored into current valuations.

Gold Price Dynamics Create Growth Opportunities

Dalal explained that sustained gold prices at current elevated levels present significant opportunities for gold financiers. The higher gold valuations enable lenders to expand their loan exposure substantially on the same collateral base.

Manappuram Finance and Muthoot Finance stand positioned to capitalize on this trend, with improved profitability prospects as long as gold prices maintain their current trajectory without sharp corrections.

Risk Factors in Gold Financing Sector

Despite the positive outlook, Dalal cautioned investors about the inherent risks in the gold financing segment. He described the sector as a "double-edged sword" where benefits can quickly transform into challenges.

The primary concern centers on loan-to-value ratios during periods of gold price volatility. At higher loan-to-value ratios, a sharp decline in gold prices could significantly erode the safety cushion that lenders rely upon. Dalal specifically warned that if gold prices experience a 15-20% correction, lenders would face substantially increased risk exposure, making close monitoring of gold price movements essential for investors in this space.

Jewellery Sector Faces Volume Challenges

The jewellery industry presents a contrasting scenario despite benefiting from higher gold prices. Dalal identified near-term challenges for jewellery companies, primarily stemming from consumer behavior patterns during periods of elevated gold prices.

Key challenges facing jewellery companies include:

• Reduced quantity of gold sold as consumers maintain fixed budgets
• Limited ability to increase making charges per gram meaningfully
• Pressure on absolute profitability despite stable margins
• Muted profit growth expectations despite potential topline gains

This dynamic creates a situation where jewellery stocks may underperform relative to gold financiers, even in a rising gold price environment.

Base Metals Rally Appears Fully Valued

Regarding the broader commodity space, Dalal acknowledged positive demand momentum in key base metals, particularly aluminum and copper. However, he expressed reservations about fresh investment opportunities in related stocks.

The sharp rally already witnessed in base metal stocks has largely priced in the positive fundamentals, limiting potential for significant additional upside. This assessment reinforces his preference for gold financiers over metal producers in the current market environment.

Strategic Investment Approach

Dalal's analysis suggests that investors seeking exposure to the commodity rally should prioritize gold finance companies over direct commodity plays. The ability of gold loan companies to leverage higher gold prices for business expansion, combined with their established business models, presents a more attractive risk-adjusted return profile compared to metal stocks that have already experienced substantial price appreciation.

Dalal specifically recommends Muthoot Finance and Manappuram Finance over metal stocks, citing elevated gold prices supporting 15-20% loan exposure growth for gold financiers. This recommendation aligns with his overall view that gold financiers are better positioned to benefit from the current commodity rally compared to metal stocks.

Manappuram Finance Ltd has delivered a strong technical breakout in December 2025, hitting fresh record highs after months of sideways movement. The NBFC stock successfully broke above its consolidation zone, signaling renewed bullish momentum in the financial services sector.

Technical Breakout Analysis

The stock had been consolidating in a narrow trading range since September 2025, with ₹300.00 serving as a key resistance level. This three-month consolidation period created a strong base for the recent upward movement, as the stock finally overcame the psychological barrier that had capped gains for an extended period.

Expert Price Targets

Technical experts have identified attractive upside potential following the breakout. Short-term traders are being advised to consider the stock for potential gains, with specific price targets established based on the current chart formation.

Market Positioning

The breakout comes at a time when the NBFC sector has been showing renewed interest from investors. Manappuram Finance's ability to overcome its resistance level and establish new highs demonstrates strong underlying momentum and suggests positive market sentiment toward the company's prospects.

The technical setup indicates that the stock has successfully transitioned from a consolidation phase to a potential trending phase, with the chart pattern supporting expectations for continued upward movement in the near term.