 "Muhurat trading sets ball rolling for bullion jewellery")
Muhurat trading set the ball rolling for the precious metals segment in India with robust sentiment restored in the bullion and jewellery sector after seven months of subdued sales trend.
With consumers’ confidence restored, sales were largely driven by the bullion segment in both spot and futures markets in the early hours of the Muhurat trading on Sunday. Traders in the futures markets were attracted on falling prices. Gold price for delivery in December on the Multi Commodity Exchange (MCX) fell by a marginal by 0.05 per cent to trade at Rs 30,066 in early trade. Silver also followed suit to trade with a decline of 0.14 per cent to Rs 42,456 a kg for near-month delivery on the MCX.
“The Diwali week was phenomenal for jewellery sales this year. Following stabilising prices over the past few days, traders who had postponed purchases over the past few months have come back to the market with fresh purchase. The Diwali week saw 40-50 per cent additional sales this year,” said Kumar Jain, director, Umedmal Tilokichand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar here.
The weak sentiment started in bullion sales after Finance Minister Arun Jaitley announced a one per cent excise duty on jewellery in February in the Union Budget this year. Protesting the move, jewellers went on indefinite strike, which continued for two months. Following this, the government tweaked the norms for the requirement of permanent account number (PAN), which reduced jewellery sales. Under the revised norms, the limit for PAN requirement was reduced to ~2 lakh from the earlier ~5 lakh. Also, the government took several measures to reduce gold import into India.
“Jewellery sales remained robust during the Diwali season this year after seven months of weak sentiments. Customers booked gold and jewellery on concerns of further increase in bullion prices. The recent fall in gold price from ~32,000 to ~29,995 for 10 gm supported consumers’ sentiment towards physical demand of gold,” said Prithviraj Kothari, managing director, RiddiSiddhi Bullions.
After two months of subdued sales, sentiment in gold and precious metals jewellery rebounded during the Diwali week, which re-energises bullion dealers and jewellers for a robust winter wedding season.
Also Read
Jewellery sales during the Diwali week contribute 15-20 per cent of India’s annual business from this segment. Most importantly, the Diwali week sets the trend for the next wedding season.
Vaibhav Agrawal, vice-president and head of research at Angel Broking, said: “We believe the domestic consumption story is gaining strength, which is clearly reflected in the strong quarterly earnings reported by companies in the automobile sector. This means that stocks of consumption-driven sectors like automobile, consumer durable etc are likely to maintain strong growth momentum going into the new Samvat year. The current softening interest rate environment is also supportive for markets to grow as some uptick in corporate earnings is expected.”
Gold import surged in October after a sustained fall for two quarters.