Leading jewellers are experiencing strong demand during this festive season, with a notable surge in interest from millennial consumers. Many millennials are actively purchasing gold jewellery, particularly on the auspicious occasion of Dhanteras, contributing to the robust demand in the jewellery market
The positive consumer sentiment is rubbing off on jewellery sector stocks, with counters like Kalyan Jewellers, Tribhovandas Bhimji Zaveri, Senco and PC Jeweller jumping up to 16 percent over the past week.
Their 1-month returns are even more remarkable, reaching as much as 30 percent. For context, the biggest gainer in the Nifty50 pack during the month has been BPCL which climbed around 10 percent.
Dhanteras, considered auspicious for buying gold and gold ornaments, will be celebrated on November 10 this year.
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“With the festive and wedding season around the corner, we are witnessing a positive sales momentum in the pre-Diwali season and expect it to be sustained till January 2024. Specifically for the occasion of Dhanteras, the robust pre-bookings have been showcasing signs of positive consumer sentiment,” said Ramesh Kalyanaraman, Executive Director – Kalyan Jewellers.
This year, the industry is benefitting from the extended wedding season as it coincides with the auspicious occasion of Diwali and Dhanteras. The studded jewellery and heavyweight festive range continues to emerge as hot favourites this season, he added.
“Furthermore, the revamped interest among younger, millennial consumers towards the yellow metal, has led to acceleration in demand momentum for traditional temple jewellery as well as polki and uncut jewellery pieces... As the industry gears up for a robust and bustling wedding season, we are optimistic about the positive sales momentum to continue till early 2024,” Kalyanaraman said.
Several other jewellery retailers have also reported an increase in sales on the occasion of Dhanteras. This upturn in sales appears to be a common trend across the industry, indicating a positive festive season for the jewellery market.
Gold and silver have witnessed sharp swings this year amid heightened geopolitical uncertainties, elevated interest rates as well as buying by global central banks.
Gold reached near its all-time high of $2,070 per ounce at the start of this year and then reversed from marking of lows close to $1,800, and now is back to $2,000 levels.
Gold of 24-carat purity was retailing at Rs 60,400 per 10 gms in Mumbai on November 7, 2023. In the last one month, gold in Mumbai has risen 6.9 percent from Rs 56,500.
“Higher interest rate scenario is a headwind for non-yielding asset gold; hence, a pivot from the current stance is critical for gold prices to sustain their upward trend,” domestic brokerage house Motilal Oswal said in a note.
In the Indian context, a strong cultural affinity for the yellow metal ensures robust gold demand all year round, though the festive period sees an uptick in purchases by households.
And it usually turns out to be a good investment.
“…had you invested in gold during Diwali 2019, by this Diwali you would have been sitting on 60% returns on your domestic Gold investments,” Motilal Oswal added.
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Regarding factors affecting bullion prices, it said the risk premium is being priced in gold, from pandemic to Russia-Ukraine war and the latest Israel-Hamas dispute.
“An ease off in the Middle East dispute and/or continuation of hawkish stance from Fed could weigh on gold prices. However, the above factors could have a hangover for longer than expected and keep the party going for gold bulls helping it guide towards medium target of Rs 63,000,” Motilal Oswal added.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.