In a weak market today, many jewellery stocks proved to be the exception, notching up smart gains of between 5 – 18 per cent. The biggest gainer is PC Jeweller which rallied 17.9 per cent. Tara Jewels ran up 11 per cent while TBZ is up nearly 8 per cent. Rajesh Exports is up more than 6 per cent.

The market seems to be betting on robust demand growth for the jewellery companies in the next few weeks. The festival season is underway with Dussera coming up next week and Diwali in late October.

Gold and jewellery demand usually rises during these big festivals. It helps that gold has been trading quite weak this year, making it more affordable to the masses. From more than Rs 33,000 in August last year, the gold futures on MCX trade at just about Rs 26,350 levels (per 10 grams). A relatively stable rupee has also helped keep domestic gold prices under check.

The country’s gold imports surged more than 150 per cent to $2.03 billion in August from $739 million in the year ago period. This suggests strong gold demand thanks to low prices. While investors may be keeping off gold due to weak outlook on prices, consumers seem to be making use of the low prices to lap up the yellow metal.

Jewellery stocks have been among the big gainers in the market rally this year. Partial relaxation of the 80:20 rule (which mandates export of at least a fifth of the gold imported) has helped improved supplies and reduced domestic premium. On the demand side, there is hope that improvement in the economy would perk up customer sentiment and translate into better volumes for jewellers. ​