Not in the near future. There are some who say the surge in automobile demand (especially commercial vehicles) and a likely turnaround in the capital goods sector could well lead to better times for finance companies. As all leading NBFCs derive a significant portion of their revenues from leasing as well as hire purchase of commercial vehicles, some marketmen say the prospects of the NBFC sector will be better than previous years. But, whatever the reason, the fundamentals do notjustify the sudden buying interest in finance stocks.

First, most of the companies have reported a dip in revenues and earnings in the first-quarter of 1999-2000. Second, the higher activity in the capital goods sector is due to the higher capacity utilisation rather than a fresh addition in capacities. Third, the rally in the finance sector has been so blind that investors have failed to take cognisance of the ground realities. Consider the case of a company like VLS Finance. Despite the Reserve Bank of India ordering a probe into the books of the company, the stock has been on the rise. On Tuesday, the stock touched a new 52-week high of Rs 24 unfazed by the reports of bogus depreciation claims.