Most jewelry company stocks rallied following the reduction in customs duty on gold, silver, and platinum, which is expected to lower import costs and subsequently boost domestic demand.
On Wednesday, gold prices were down at ₹69,151 per 10 gram against ₹69,602 on Tuesday, while that of silver dipped to ₹84,862 per kg (₹84,919), according to the Indian Bullion and Jewellers Association.
Shares of Kalyan Jewellers and PC Jeweller were up 6 per cent and 5 per cent at ₹588 and ₹78, respectively. While Thangamayil Jewellery was up 2 per cent at ₹1,942, Rajesh Exports and Titan Company were up 0.62 per cent and 0.14 per cent at ₹318 and ₹3,473, respectively.
Palka Arora Chopra, Director, Master Capital Services, said the cut in customs duty will have negative impact on jewellery companies with high inventory in the short term as they had bought the inventory at high prices.
In terms of margins, jewellery companies with unhedged gold will be the most affected. Additionally, incidents of gold smuggling is expected to come down as the price in the mainstream market is set to be competitive, she said.
Demand revival
Anil R, Senior research analyst, Geojit Financial Services, said the cut in duty and fall in prices will revive gold jewellery demand which had moderated in the recent times due to high prices.
“We expect the premiumisation trend to boost revenue growth of leading companies,” he said.
Vaishali Banerjee, MD, India at Platinum Guild International, said the cut in platinum duty to 6.4 per cent will enable to grow platinum jewellery market in India and tap opportunities abroad. “We anticipate that this reduction will catalyse the already growing demand, increase platinum jewellery footprint, generate employment and support a sustainable future growth,” she said.