Most Jewellery Stocks Recover On May 13, But Investors Remain Cautious After PM's Address, Hike In Gold, Silver Import Duty

Jewellery stocks have come under pressure after Prime Minister Narendra Modi appealed to people to avoid buying gold for the next year. However, on May 13, heavyweight jewellery stocks recovered, breaking from the recent losing streak even as the government announced a hike in gold and silver import duties.

Jewellery stocks had lost nearly Rs. 60,000 crore in market value in just three trading sessions after the government delivered a double setback to the sector. Shares of major companies like Titan Company, Kalyan Jewellers, Senco Gold and Thangamayil Jewellery fell sharply as investors reacted to concerns over slowing demand and rising costs.

The sharp fall began during Modi’s address to the nation. The government said the move was aimed at reducing pressure on India’s foreign exchange reserves at a time when global crude oil prices and geopolitical tensions remain high. India is the largest consumer of gold jewellery and is almost entirely dependent on imports, which can weaken the rupee and widen the trade deficit.

The Centre also increased customs duty on gold and silver imports to 15 per cent from 6 per cent. The higher duty is expected to increase raw material costs for jewellery companies, affecting profit margins and possibly reducing consumer demand further.

This led to a severe market reaction, with shares of several jewellery companies falling around 14-20 per cent over the last few sessions. Investors feared that weaker gold purchases, combined with higher import costs, could hurt sales growth in the coming quarters.

However, on May 13, several jewellery stocks recovered slightly from previous losses. Shares of Titan rose 0.6 per cent while Senco Gold rose over 4 per cent from the previous close. PC Jeweller shares also rose over 1 per cent. However, shares of Kalyan Jewellers continued to fall, closing nearly 1 per cent lower from the previous session.

Analysts believe the panic may have been temporary. India’s demand for gold remains deeply tied to weddings, festivals and household savings. Experts said consumers may delay purchases for some time, but long-term demand is unlikely to disappear completely. Organised jewellery brands could also recover faster because customers trust them more during uncertain times.

Jewellers are also pushing the government to focus more on gold recycling and monetisation schemes instead of discouraging purchases. Industry bodies argue that India already has large quantities of unused gold in households, and recycling this gold could reduce imports without hurting the jewellery business. While the recent correction has been painful, some market experts believe the worst of the panic selling may already be over if demand proves more resilient than feared.  

Meanwhile, gold futures on the MCX rose nearly 6 per cent on May 13, driven by the hike in import duties imposed by the government. “Rising import duty may have a positive impact on prices, but rising oil in the international markets may cap the upside,” Jigar Trivedi, senior analyst at IndusInd Securities, formerly Reliance Securities, said.