Titan to Kalyan: Jewellery stocks tank up to 7%; what dented their sheen?

Analysts attribute the decline in most jewellery stocks to profit booking by investors and an appeal by PM Modi to avoid buying gold if not needed.

Most jewellery stocks faced selling pressure on Tuesday, September 1, falling up to 7 per cent in intraday deals, with Kalyan Jewellers emerging as the biggest loser. 

 

Shares of Kalyan Jewellers declined as much as 6.7% to ₹572.75 apiece. Meanwhile, industry leader Titan Company declined 1.95 per cent to ₹5015.75 on the BSE. 

 

Other jewellery stocks like Shanti Gold International, BlueStone Jewellery, Goldiam International, Thangamayil Jewellery and Motisons Jewellers declined between 0.6-3.7 per cent today. 

 

On the flip side, a handful of stocks like Lalitha Jewellery, Tribhovandas Bhimji Zaveri (TBZ) and Senco Gold gained up to 20 per cent. The rally in TBZ can be attributed to GRT Jewellers India's share purchase agreement (SPA) to acquire a 74.12 per cent stake in the company.

 

 

What's dimming the shine of jewellery stocks?

Analysts attribute the decline in most jewellery stocks to profit booking by investors after strong gains seen in these stocks recently on the back of a robust Q1 performance. 

 

Stocks like Titan, Kalyan, Thangamayil, and Shanti Gold International have added 24 per cent, 40 per cent, 35 per cent and 16 per cent, respectively in the last six months alone. 

 

Seema Srivastava, senior research analyst at SMC Global Securities, said, "In the first quarter, Titan and Kalyan reported more than 20 per cent growth. Same-store sales also normalised during the quarter. Because of this, the stocks hit all-time highs. Gold prices were also running high at that time. As a result, these stocks moved up significantly. Now, investors are booking profits."

 

Additionally, analysts said some caution has crept in following Prime Minister Narendra Modi's appeal to avoid buying gold. “If there’s no need, don’t buy gold,” Modi said in a video posted on social media platform X. Gold is India’s biggest imported commodity after oil and a major contributor to the trade deficit.

 

"This is the second time the government has made a similar statement, and with the stocks already trading at elevated levels, investors find it a good time to book gains," Srivastava added.

 

She further expects some pressure on the margins of these companies during the second quarter as it coincides with the 'shradh' period, during which some Indians traditionally refrain from making auspicious purchases.

 

Disclaimer: Views and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers' discretion is advised.