A day worth its weight in gold

Akshaya Tritiya, one of the most auspicious occasions on the Hindu calendar for buying long-term assets such as gold, silver (including ornaments thereof), diamonds and precious stones, dawns in the backdrop of a generalised trend of spiralling inflation this year.

Economists say that ‘quantitative easing,' a monetary policy tool leveraged by the US Federal Reserve to pump in dollars to get the tottering economy back on its feet post-recession, had inadvertently flagged off an ‘inflation bugbear' that has since run amuck across commodity/asset classes and whole geographies.

‘SAFE HAVEN'

It was but natural that gold, with its ‘safe haven' status for all seasons, also get roiled in the process, sending prices to conquer summit after a new summit this year – and forecast to sustain the trend given the weakness in the dollar, a tattered Euro economy and geopolitical concerns arising from the unrest in West Asia.

Back home, around 50 per cent of India's gold consumption is in the southern region, specifically in Kerala and Tamil Nadu.

An estimated 30 per cent of this is accounted for by Kerala which has the largest number of jewellery outlets (unofficial figures put it around 6,000). Thrissur district in central Kerala is the hub of the business, home to the largest number of jewellery retail shops and craftsmen.

Gold prices have risen by 24 to 30 per cent as compared to Akshaya Tritiya of last year. In Tamil Nadu and Kerala, gold buying this year is being fuelled by the fear of a further rise in prices – a case of ‘inflationary expectations' prompting incremental stocking up of the precious metal.

MORE SPECIAL

The auspicious day falls on May 6, and the fact that it happens to be a Friday makes it even more special, say firm ‘believers.' Legend has it that any new venture initiated on this day shall continue to grow and bring prosperity. Gold merchants could not agree more.

A section of the traders expect sales volumes to increase by at least 15 per cent. But this is sought to be tempered by another, which holds the view that the high price would contract transacted volumes by as much as 10 to 20 per cent.

Mr Mehul Choksi, Chairman and Managing Director of Gitanjali Group, has observed that Akshaya Tritiya fetches nearly 10 per cent of annual gold sales for Gitanjali. He is expecting a 40 per cent growth in jewellery sales in terms of value.

According to Mr Bachhraj Bamalwa, Chairman, All-India Gems and Jewellery Trade Foundation, the consumer mood is very upbeat despite the price touching a new peak of over Rs 23,000 per 10 grams during last week. He expects the business to grow by 40 per cent in value terms.

VOLUMES MAY HOLD

There are at least 100 big jewellery businesses in Kerala having a stock of 35 kg at any given time. On a normal day, sales clocked are unofficially assessed to range from 100 gm to as much as 10 kg. There has also been the rare instance of sales touching 22 kg on a single day.

Speaking to Business Line , Dr B. Govindan, Chairman of Bhima Jewellers, among the largest jewellery houses in Kerala, said that, like in the past, Akshaya Tritiya has evinced very good interest this year too.

He expects sales to rise 20 to 26 per cent in terms value terms, but added that the volumes would hold more or less at the same level recorded last year. Dr Govindan made his projections based on the premise that consumers are willing to spend more this time round.

More so in the context of the wedding season that would follow, prompting parents stock up in advance.

They are also equally eager that girls married off are treated equal in terms of the dowry and gold entitlements even if it meant spending the extra as times such as now warrant.

Bhima Jewellers had thrown open pre-booking facility in the run up to Akshaya Tritiya.

Dr Govindan said that the booking counter has been witnessing heavy rush, particularly over the last four or five days. He said that ‘Bhima Gold' is very competitively priced vis-à-vis offers from banks and non-banking financial companies.

The margin could be as high as 10 to 12 per cent, thanks to the heavy value-addition resorted to by the latter. Representative of two other sections of the trade, textiles and builders, have been less enthusiastic about the ‘flawed projection' of Akshaya Tritiya as an occasion for meaningless splurge and foolish indulgence.

The day is an occasion to practice giving and sharing, says Mr Gopal Rao of Sri Gurukripa, a leading textiles dealer in Thiruvananthapuram.

DIFFRERENT THOUGHTS

But he would not fault other members of the trading community for promoting sales in the run-up to the occasion since they have every right to conduct normal business in whichever manner they think is right for them.

Mr Biju Panicker of Sivahari Builders, a leading promoter of residential properties in Thiruvananthapuram, is not expecting to see any significant movement in the market to coincide with Akshaya Tritiya.

The sentiment is also being helped by the realisation among customers that prospects of appreciation in asset values are heavily loaded in favour of land compared to flats/residential property in a State known for its scarcity of the resource.

NO FRENZY

People couldn't care less about Akshaya Tritiya, which has not witnessed any targeted buying frenzy in the past in the State, Mr Panicker said. But the case could be entirely different with gold, which is a much more liquid asset and easily transacted.

Mr Panicker agreed that the hype built around Akshaya Tritiya has been all-pervasive as evidenced in at least 70 enquiries that pouring in after he placed an advertisement in leading language newspapers to coincide with the occasion. This is spectacular, he said, adding that the time and money spent would be worth the while if at least three out of the 70 gets ultimately converted.

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