Policy double blow: A call to defer gold buying and a hike in import duties from 6% to 15% triggered sharp declines in jewellery stocks.
Sector-wide wealth erosion: Nearly Rs 60,000 crore in investor value vanished across major jewellery firms in just three sessions.
Analysts divided: Some see robust fundamentals supporting long-term recovery, while others warn of prolonged volatility and margin pressure.
Prime Minister Narendra Modi urged citizens to refrain from buying gold for a period of one year. This public appeal was aimed at influencing consumer behavior in the gold market. The statement directly targeted reducing gold demand in the country.
The government raised import duties on gold and silver from 6% to 15%. This policy change was intended to curb imports and support the Indian rupee. The higher duties are expected to impact the cost structure for jewellery businesses.
Market analysts cautioned that the increase in gold and silver import duties will compress profit margins for jewellery companies. They also warned that the higher duties are likely to dampen consumer demand in the coming quarters.
Shares of jewellery companies fell by as much as 12% after Prime Minister Narendra Modi urged citizens to refrain from buying gold. The market reaction was immediate, with significant declines observed across the jewellery sector.
Shares of Titan, Kalyan Jewellers, and PC Jeweller fell following an increase in import duty. The policy change contributed to the recent downturn in jewellery company stock prices.
Kalyan Jewellers' share price fell sharply to Rs 340 at its lowest point. This drop represented a significant decline from previous levels and broke key technical support levels. The stock also entered oversold territory during the downturn.
Since May 8, Kalyan Jewellers has seen its market capitalisation decline by Rs 7,229 crore. This drop is part of a broader sell-off in jewellery stocks during the same period.
Shares of major jewellery companies Titan and Senco Gold saw notable drops in value. These declines occurred in the wake of the government's import duty increase and the Prime Minister's call to pause gold purchases. The market reaction was broad across the sector.
Rising bullion prices have had a negative effect on the share prices of physical jewellery companies. This trend has contributed to the recent sharp declines in their market valuations.
Citi has highlighted that the jewellery sector faces near-term risks. These risks are linked to current market conditions and could affect the performance of companies within the sector. The assessment suggests that investors should be cautious in the short term.
Kalyan Jewellers reported a net profit of ₹409.5 crore for the fourth quarter of FY26, representing a 118% increase compared to the same period in the previous year. This substantial year-on-year growth highlights the company's strong financial performance during the quarter.
Historically, gold demand has shown resilience during weddings and festivals. This trend could benefit organised jewellers like Kalyan Jewellers in the long term by helping them regain market share.
In times of uncertainty, consumers may gravitate towards trusted jewellery brands. This shift in preference could support organised players such as Kalyan in strengthening their market position.
No comments:
Post a Comment