Jewellery stocks including Titan Company, Kalyan Jewellers India and Senco Gold fell up to 11 per cent on May 11, a day after Prime Minister Narendra Modi urged citizens to postpone buying “non-essential” gold for a year, among other measures, to reduce pressure on India’s widening current account deficit.
At the end of the session, Titan shares closed lower by 6.72 per cent, Kalyan Jewellers fell 9.62 per cent, and Senco Gold plunged as much as 11 per cent before recovering slightly to close with 8.50 per cent in the red. Other jewellery stocks such as Thangamayil Jewellery, PN Gadgil Jewellers, PC Jeweller, Sky Gold and Diamonds, Bluestone Jewellery, and Goldiam International, among other gold stocks also settled in the negative territory.
Why PM Modi Want Indians To Stop Buying Gold
PM Modi's appeal is aimed at cushioning India’s external accounts at a time when global conditions have turned increasingly uncertain, particularly due to rising geopolitical tensions in West Asia.
Gold is one of India’s biggest import items after crude oil and electronics. Unlike industrial imports that support manufacturing and exports, most gold imports are driven by jewellery demand, household savings, and investment buying.
This leads to billions of dollars leaving the country every month, which puts pressure on the current account deficit and foreign exchange reserves.
The situation becomes even more challenging when crude oil prices are also rising. India imports nearly 85 per cent of its oil demand, and ongoing tensions in West Asia have pushed global energy prices higher while also disrupting supply chains.
Higher oil prices increase India’s import bill, weaken the rupee, and strain dollar reserves. In such a scenario, heavy gold imports add further pressure on the country’s external finances.
