Diwali 2022: Dhanteras likely to see bumper demand for jewellery

Industry captains expect a 15-20% increase in demand over last year's high base

Another bumper season is awaiting jewellers as demand during Dhanteras and Diwali is expected to be 15-20 per cent higher than what it was last year.

In the previous season, demand was up 20-25 per cent over a year earlier but that was mainly because of pent-up demand from the lockdown year.

Ajoy Chawla, chief executive officer, jewellery division, Titan Company, said: “With this being the first post-pandemic ‘normal’ Diwali, people are expecting to celebrate a ‘no-holds-barred’ festival this year. Sentiment is up, and the mood is infectious not just for jewellery but all categories. Gold rates have been low compared to what they were six months ago and that should create more interest.” 

During the current Samvat year (2078) so far, gold prices are still higher by over 5 per cent but for the last two quarters the international price has seen a sharp fall and in India prices are higher at around Rs 50,000 per 10 gm mainly because of the depreciation of the rupee.

Surendra Mehta, national secretary, Indian Bullion and Jewellers Association, shares the views of Chawla.

Mehta said: “It seems that there is fear in people’s mind that they will be left without gold.”

The uncertainty hovering around the world economy, a likely recession, the strengthening of the dollar index due to the collapse of various world currencies, and geopolitical tensions are the main reasons as to why there is a rush to buy gold. Benign prices of gold have only added fuel to the demand.

In India, Dhanteras and Diwali see the highest sales of gold after Akshaya Tritiya.

The upcoming wedding season (after a fortnight) is also driving demand for jewellery.

Chawla said: “We are seeing a lot of traction for all our new collection with record sales through rates, particularly Chozha for Tamil Nadu and Alekhya for the rest of the country, confirming the woman’s desire for new designs that she wants to adorn as she gets ready to socialise once again this Diwali.”

Titan is also seeing a continued interest in lightweights, layering, and colour, validating the company’s belief that women value adornment over keeping jewellery in the locker, a secular trend now for the past two years.

“Tanishq is anticipating and targeting good growth despite the high base of a record-breaking festival season last year. We also expect this festival season will see significant wedding purchases for the season to follow,” said Chawla.

Industry captains say there is a huge rush to buy gold not only in western India but also North India.

In South India, gold sells well every year during Diwali, said Mehta.

“The good monsoon has enabled good sales in rural India also. We have observed that this year not only lightweight jewellery is sold but there is heavy demand for bridal jewellery probably due to the high number of weddings ahead of Diwali,” added Mehta.

A few concerns
 

The demand for digital gold and investment, however, may trail that of physical gold and jewellery, say experts.

Chirag Sheth, principal consultant, Metal Focus, said discussion with jewellers around the country suggested that demand was expected to be good owing to lower prices. Most jewellers expect a 10-20 per cent jump.

The import of gold in the past few weeks has remained good, indicating jewellers have been upbeat for this season.

“However, last year investment demand and digital gold demand were good while this time jewellery is finding traction. Digital gold demand seems to have saturated and investment demand may trail jewellery demand. The next few days will show whether these two segments see demand or trail,” said Sheth.

Among other things, inflation is having an impact on gold demand.

Somasundaram PR, managing director, World Gold Council, is optimistic but cautious.

He said: “With the recent correction in local gold prices and a favourable monsoon, festival sentiment among retail consumers appears to be positive. However, the impact of inflation on household finances may lead to an immediate impact on gold jewellery demand.”

Unlike the Diwali season in 2021, this year may not have the advantage of pent-up demand from the previous year or savings from muted wedding celebrations fuelling higher gold purchases, he said.