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Jewellery stocks continued their downtrend on Monday with the expectation that the sudden sharp fall in gold prices may keep buyers away for the next few months.
Shares of leading jewellers such as Gitanjali Gems, Shree Ganesh Jewellers, Titan Industries, Thangamayil Jewellers, Asia Star and Tara Jewels dipped 2-5 per cent on Monday.
Besides, almost all the gold exchange-traded funds floated by SBI, Quantum, Kotak Mahindra, ICICI Prudential, HDFC and Birla fell seven to 10 per cent, with Reliance and IDBI gold ETF plunging to a new low.
Taking the cues from the global markets, gold prices in India was down sharply both in the spot and futures market on Monday. Standard gold in Mumbai fell by Rs 1,198 for a 10 gram to Rs 26,550. Gold prices have fallen 11 per cent in the last one week and 14 per cent so far this year.
Jayant Mangalik, President (Retail Distribution), Religare Brokerage, said while gold purchases would be attractive now for those who were waiting for a fall, investors with a short-term focus should reassess their plans. Systematic monthly investments via e-gold and ETFs remain the best way to invest in gold, he said.
Hits lower circuit
On the MCX, gold for June delivery dipped six per cent to hit the lower circuit at Rs 26,250/ 10 grams, a level last seen in September 2011. Indicating a sustained bearish trend, gold for August delivery also hit the lower circuit at Rs 26,643/ 10 grams.
Abhishek Chinchalkar, Research Analyst, Anand Rathi Commodities, said persistent outflow from gold ETFs has been the major cause for the fall in gold prices globally. For instance, gold holdings of the SPDR Gold Trust, the world’s largest gold fund, declined to a 3-year low of 1,158.56 tonnes on Friday.
Rajnish Rastogi, Senior Fund Manager and co-Head — Equities, Motilal Oswal Asset Management Company, said the industry would be split into two with the first one giving gold in physical form as a return, and another giving investor access to gold price movement.
“We continue to see inflow into our fund as we deliver gold in physical form as return. Since gold is embedded in our culture, it will be difficult for people to stay away from gold for long,” he added.
suresh.iyengar@thehindu.co.in
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