After a long hiatus, jewellery company stocks were in good demand after the government in a surprise move lifted curbs on gold imports last weekend. The recent fall in gold prices has revived demand for gold jewellery in the domestic markets.
Jewellery stocks that were in good demand include Gitanjali Gems (20 per cent), Shree Ganesh Jewellery House (20 per cent), Tribhovandas Bhimji Zaveri (19 per cent), Titan Company (5 per cent), Thangamayil Jewellery (5 per cent), Rajesh Exports (3 per cent) and PC Jeweller (3 per cent).
Paras Bothra, Vice-President, Ashika Stock Broking, said though the fall in gold prices has revived the demand, the euphoria to buy gold witnessed when the prices were going up would take some years to return.
“The rise in jewellery company stock prices was largely a knee-jerk reaction to the change in government’s gold import policy. In the long run, only companies with large retail presence would create wealth for investors,” he added.
Oil price fall helps The recent sharp fall in crude oil prices and signs of economic revival enabled the government to revoke the restriction even as gold imports more than doubled in the September quarter to touch 204 tonnes.
The curb on imports along with the hike in import duty to 10 per cent from 2 per cent had resulted in gold imports falling by 25 per cent last fiscal.
The move to scrap import restriction is expected to cut premiums of gold to $1-2 an ounce from $18 an ounce, leading to lower prices for buyers. The demand for gold jewellery has picked up since last quarter due to drastic fall in prices. It jumped 60 per cent to 183 tonnes in the September quarter and in value terms it was up 31 per cent to ₹56,219 crore (₹42,830 crore).
Pankaj Parekh, Vice-Chairman, Gem and Jewellery Export Promotion Council, said the demand in the export market has already started looking up, particularly in the US as signs of green shoots in economy are quite visible.
“Most of the retailers in the US are witnessing customers’ preference shifting back to 14 carat white gold from sterling silver jewellery,” he said.