A sharp decline in sales and prospects of a grim future have resulted in a fall in jewellery stocks.
Dilip Kumar Jha reports.
Jewellery stocks lost up to a fourth of their value since the demonetisation three weeks ago due to sharp decline in sales.
The share price of the New Delhi-based PC Jeweller fell 24.99 per cent since November 8 when Prime Minister Narendra Modi announced discontinuation of Rs 500 and Rs 1,000 currency notes. The stock closed at Rs 360.45 on Friday.
Demonetisation has hit the jewellery business hard with cash deals evaporating.
Jewellers said cash purchases were necessary because village women bought ornaments through kitchen savings.
"The liquidity crisis has resulted in an 80% to 90% decline in jewellery sales since November 8," said G V Sreedhar, chairman, All India Gems and Jewellery Trade Federation.
"Because of weak demand, jewellers are not buying bullion. For the next two months gold and jewellery sales are likely to remain subdued," said Prithviraj Kothari, managing director, Riddi Siddhi Bullions.
"Around 50% of jewellery in India is bought by cash. Sales will start recovering once new notes are in circulation," said Ajeya Patil, analyst, Evaluate Research.
Demonetisation is unlikely to affect jewellery exports.
Rajesh Exports, which derives over 90% of its sales overseas, is likely to remain unaffected.
Rajesh Mehta, founder and executive chairman, Rajesh Exports, said he expected a marginal decline in retail jewellery sales over the next month.
C Vinod Hayagriv, managing director of the Bengaluru-based heritage jeweller C Krishniah Chetty & Sons, expects a 15% decline in sales over the next six months.
The price of gold in international markets declined 13% from a high of $1,365 an ounce in July to $1,188 an oz on Sunday.
Most of the fall was after the US presidential election results were declared.
In rupees, gold declined 5% since November 8 to close at Rs 28,855 per 10 gram on Friday.
Traders forecast gold prices would remain volatile with a downward bias after the interest rate decision by the US Federal Reserve in early December.
IMAGE: A jewellry showroom in Mumbai. Photograph: Reuters
© 2024 Rediff.com -