Jewellery Stocks Tumble After PM Urges to Delay Gold Purchases
Emphasising that the Centre is trying to shield people from the adverse impact of the conflict in West Asia, the Prime Minister on Sunday called for judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to strengthen the economy
New Delhi: Jewellery stocks faced massive selling pressure on Monday, with Kalyan Jewellers tumbling over 9 per cent, after Prime Minister Narendra Modi called for postponing the purchase of gold and foreign travel for one year to save foreign exchange amid the West Asia crisis. In the short-term, the appeal may slow discretionary purchases, particularly in jewellery demand, and create cautious sentiment across bullion and jewellery-related businesses, an expert said.
Kalyan Jewellers tumbled 9.23 per cent, Senco Gold tanked 8.61 per cent, Tribhovandas Bhimji Zaveri declined 7.52 per cent, Titan Company lost 6.83 per cent, Sky Gold And Diamonds Ltd fell by 6.63 per cent, Thangamayil Jewellery slumped 5.69 per cent and PC Jeweller dipped 4.94 per cent on the BSE.
In the equity market, the 30-share BSE Sensex tanked 1,312.91 points, or 1.70 per cent, to settle at 76,015.28. The 50-share NSE Nifty dropped 360.30 points or 1.49 per cent to end at 23,815.85.
"Jewellery stocks were among the worst hit after the Prime Minister urged citizens to avoid gold purchases for a year, even during weddings. Titan emerged as one of the top Nifty losers, while Kalyan Jewellers and Senco Gold saw steep declines as the street priced in a potential slowdown in discretionary demand," Hariprasad K, Research Analyst and Founder, Livelong Wealth, said.
Emphasising that the Centre is trying to shield people from the adverse impact of the conflict in West Asia, the Prime Minister on Sunday called for judicious use of fuel, postponement of gold purchases and foreign travel, among other measures, to strengthen the economy.
Stressing the need to save foreign exchange due to the crisis, Modi called for postponing the purchase of gold and foreign travel for one year.
"We have to save foreign exchange by any means," he said, adding that due to the West Asia conflict, prices of petrol and fertilisers had increased significantly.
Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said PM Modi's remarks on delaying gold purchases should be viewed primarily from the perspective of India's macroeconomic stability and import management.
"India is one of the world's largest gold importers, and during periods of elevated crude oil prices and global uncertainty, high gold imports put additional pressure on the country's trade deficit and the rupee," Trivedi said.
The timing of the statement is important because India is facing a combination of higher crude prices, geopolitical tensions linked to the US-Iran situation, and pressure on the currency due to rising import bills, he said.
"The appeal is unlikely to significantly change long-term Indian demand for gold because gold remains deeply linked to savings, investment, and cultural buying patterns. However, in the short-term, it may slow discretionary purchases, particularly in jewellery demand, and create cautious sentiment across bullion and jewellery-related businesses," Trivedi added.
