Motilal Oswal sector of the week: gold and jewellery; check stocks, targets

India’s gold and jewellery sector shines amid price volatility and evolving consumer preferences

India’s gold and Jewellery sector is navigating a phase of transformation, balancing record-high prices with resilient consumer sentiment and evolving buying patterns. Despite a steep rally in gold from $3,500 to $4,000 per ounce in just 35 days, one of the sharpest increases in recent history. The underlying demand remains steady, supported by cultural affinity and strategic investment appeal.

 

During the recent Shradh and festive period, Jewellery sales volumes softened temporarily as gold crossed the ₹1,20,000 per 10g mark. However, pent-up demand from the upcoming wedding season is expected to offset the short-term moderation once prices stabilise, sustaining India’s position as the world’s largest Jewellery market ahead of China.

 

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Globally, gold consumption continues to be driven by Jewellery, investment flows, central bank diversification, and growing industrial use in AI chips and electronics. Central bank’s accelerated de-dollarisation is reflected in China’s declining USD reserve share from 74 per cent to 57 per cent since the Russia-Ukraine conflict which has reinforced steady institutional gold buying.

 

In India, Jewellery accounts for nearly 70 per cent of total annual gold demand, with investment demand forming the balance. A notable trend is the sharp rise in gold ETF assets under management, which have more than doubled from 40 tons in early 2024 to over 80 tons currently, signaling growing financialisation and investor appetite for paper gold.

 

Structural shifts are also redefining Jewellery consumption. Around 58 per cent of India’s gold Jewellery demand remains wedding-driven, but changing lifestyles and younger consumers’ preferences are boosting demand for lightweight, lower-carat designs. Simultaneously, imitation Jewellery is gaining traction for fashion-led purchases, coexisting with traditional gold Jewellery rather than replacing it.

 

Rural India continues to underpin demand, contributing roughly 40 per cent of national gold consumption. Strong agricultural income and the enduring link between income growth and gold purchases - where a 1 per cent rise in income correlates with a similar rise in demand; underscore the sector’s rural sensitivity. 

 

Formalisation has been another structural positive. Organised players now account for about 45 per cent of the market, supported by hallmarking mandates, transparent pricing, and gold recycling efficiencies. Meanwhile, both lab-grown and natural diamonds are set to expand within distinct consumer segments, one driven by sustainability and affordability, the other by heritage and emotional value; ensuring the Jewellery sector’s long-term structural depth and resilience.  ALSO READ| Gold price falls ₹10 to ₹1,30,850; silver falls ₹100, trades at ₹1,71,900

Titan – Target Price: ₹4,150

Titan continues to exhibit strong momentum and strategic clarity, solidifying its leadership in India’s lifestyle market. In Q2 FY26, overall consumer businesses grew 20 per cent year-on-year, with the jewellery segment advancing 19 per cent despite a 17 per cent increase in gold prices, driven by higher average ticket values and growing demand for premium studded collections. The international business expanded sharply by 86 per cent, supported by robust traction in key regions such as the US.  

The company added 55 stores during the quarter, bringing its total to 3,377 outlets, thereby strengthening both domestic and overseas presence. Backed by a vertically integrated structure, strong brand recall, and a wide retail footprint, Titan is well placed to sustain its growth trajectory amid favourable macro drivers like rising disposable incomes and growing preference for organised and branded products in India and international markets. 

(Disclaimer: This article is by Motilal Oswal Financial Services Research desk. Views expressed are its own.)