Jewellery Stocks Plummet Following Modi's Call to Reduce Gold Purchases
Jewellery stocks slide after Modi urges Indians to buy less gold
Mint
Image: Mint
Shares of Indian jewellery retailers dropped significantly after Prime Minister Narendra Modi urged citizens to limit gold purchases to help conserve foreign exchange reserves. Kalyan Jewellers, Senco Gold, and Titan Company saw declines of 9.27%, 8.18%, and 6.73%, respectively, as concerns about demand and potential import duty increases grew.
- 01Prime Minister Modi's appeal to reduce gold purchases led to a significant drop in jewellery stocks.
- 02Kalyan Jewellers, Senco Gold, and Titan Company experienced declines of over 6%.
- 03The gems and jewellery sector employs over 5 million people in India.
- 04Industry executives warn of tighter financing conditions and potential higher import duties.
- 05Retailers are shifting towards gold exchange programmes and lightweight jewellery to sustain demand.
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Shares of Indian jewellery retailers fell sharply on Monday after Prime Minister Narendra Modi urged citizens to cut back on gold purchases to alleviate pressure on the country's foreign exchange reserves. Kalyan Jewellers India saw a 9.27% decline, Senco Gold dropped 8.18%, and Titan Company fell 6.73%, underperforming the benchmark Nifty50 index, which closed 1.49% lower. Modi's comments raised concerns about reduced demand, tighter financing conditions, and potential increases in import duties for the sector. The gems and jewellery industry is crucial, employing over 5 million people directly and indirectly, with organized retailers holding a 37-42% market share. India faces a current account deficit due to high imports, with gold imports estimated at nearly $72 billion annually. Retailers are adapting by promoting gold exchange programmes, where consumers trade old jewellery for new, helping to mitigate import increases. However, analysts caution that reducing dependence on physical gold will be challenging, especially in rural areas where gold serves as a safety net.
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The jewellery sector's decline may lead to job losses and reduced economic activity, affecting millions dependent on this industry.
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