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Jewellery stocks up on revival in consumer interest post PMLA exemption

Tribhovandas Bhimji Zaveri closes 5.27% up, Gitanjali Gems, Titan Company rise by 3.58% and 3.48%

Dilip Kumar Jha  |  Mumbai 

Jewellery, stocks, PMLA
Customers buy gold jewellery at Dagina Bazar in Mumbai on Monday. (Photo: Kamlesh Pednekar)

moved up by upto 5.38 per cent on Monday due to a sharp improvement in consumer sentiment towards this sector following the government's decision to exempt jewellery sector from the ambit of the Prevention of Money Laundering Act (PMLA).

While the share price of Tribhovandas Bhimji Zaveri jumped by 5.27 per cent to close on Monday at Rs 127.75 apiece, that of Gitanjali Gems and Titan Company shot up by 3.58 per cent and 3.48 per cent to close at Rs 72.40 and Rs 617.75 respectively.

Consumers' mood suddenly turned upbeat since Friday, after the (goods and services tax) Council announced the withdrawal of the August 23 notification that extended the net to jewellery sector. This means, jewellers needed to seek identity proof like permanent account number (PAN) and details from customers for cash purchase of ornaments above Rs 50,000 under the Following withdrawal, customers rushed to jewellery shops to book their piece of gold to celebrate this season joyfully with the cash purchase limit going up to Rs 200,000.

"Jewellers and bullion dealers are now expecting full recovery in their business this festive season which they have lost over the last one year. With huge consumer turnouts, jewellers expect a bumper sale this festive season," said Surendra Mehta, National Secretary, India Bullion and Jewellers Association (IBJA).

Jewellery sector in India has been reeling under tremendous stress over the last one-and-a-half year since the government levied 1 per cent of the excise duty last year. The government's decision prompted jewellers to observe 42-day of nationwide strike to protest the move. Again late last year, the government reduced the maximum threshold of cash transaction to Rs 200,000 from Rs 500,000 earlier. Effective July 1, 2017, the of 3 per cent was levied which enough to drive consumers away from jewellery purchase. The slowdown in consumer sentiment has forced mass migration of skilled workforce to other sectors including textiles.

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"Many skilled jewellery workers have intermittently migrated to other remunerative and consistent employment sectors. Over the last ten years, the workforce in jewellery sector has declined to a mere 200,000 from the 500,000 earlier," said Sanjay Shah, Founder member Jewel Maker Welfare Association (JMWA).

Meanwhile, jewellery sectors are working on to bring back skilled workforce with a revival in sentiment with the government's initiative to focus on skill development of small and medium enterprises.

"The business sentiment has turned extremely positive. Consumers are buying jewellery not only for delivery in spot but also for the auspicious occasions of the Dhanterus (October 17) and (October 19)," said Rajesh Mehta, Chairman and Managing Director, Rajesh Exports.

Apart from relief, consumers are attracted with a decline gold prices in both the global and the domestic While gold price reported a decline of $75 from its recent peak of $1350 an oz, the bullion has declined by Rs 700 to quote at Rs 29810 per 10 grams.

"The ongoing geo-political tensions between North Korea and the United States coupled with the weak US non-farm payroll data may keep gold prices up in short term. Rising consumer demand in India would support gold's upward move," said Gnanasekhar Thiagarajan, Director, Commtrendz.

Meanwhile, the sudden spurt in jewellery demand is set to help rise India's gold import in coming months.

First Published: Tue, October 10 2017. 01:05 IST
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