While the wedding season is in full swing this summer, the stock market witnessed decline in the shares of jewellery companies on Monday, May 11. This comes after Prime Minister Narendra Modi on Sunday appealed to citizens to avoid buying gold for a year in an effort to help save the country’s foreign exchange reserves following the Iran-US conflict. Following PM Modi's appeal, shares of several jewellery companies, including Titan and Kalyan Jewellers, fell by 9 to 10%.
India is the world’s second-largest consumer of gold. In the last financial year, the country imported nearly 60 tonnes of gold worth around $6 billion every month. Senco Gold was the worst hit by the Prime Minister’s statement, with its shares falling nearly 10% to Rs 325.25.
Also Read | Vodafone Idea Shares Jump Over 5% Amid Fundraising Hopes and Government Relief Measures.
Shares of Kalyan Jewellers also declined by more than 9% to Rs 382.20 during the trading session. Titan Company shares fell 8% to Rs 4,151.40.
The country’s gold imports are already under pressure. Gold imports are expected to be only 15 tonnes in April, the lowest level in three decades. One of the main reasons is believed to be the suspension of gold imports by banks after the government began collecting 3% Integrated Goods and Services Tax (IGST) from banks.
Interestingly, these companies reported strong financial performances in the March quarter despite the fall in their share prices.
Titan Company reported a 35% rise in net profit to Rs 1,179 crore, while revenue increased 46% to Rs 20,300 crore.
Kalyan Jewellers posted a 118.2% jump in net profit to Rs 409.5 crore. The company’s revenue also rose 66.2% to Rs 10,274.9 crore.
While the companies reported strong financial results, government policies and the Prime Minister’s appeal have created uncertainty among investors in the jewellery sector.