Gems and jewellery stocks lost shine in 2018
The diamond and jewellery industry was hit in 2018 after one of the biggest banking scam was revealed in India. Celebrated diamantaire Nirav Modi cheated Indian banks of Rs. 13,000 crore. A steep erosion in the value of Nirav Modi brand was inevitable.
With this scam, one of India’s most high-profile jewellery company Gitanjali Gems came under the radar of investigating agencies. Its owner Mehul Choksi (uncle of Nirav Modi) owes Rs. 6,000 crore to banks. The stock of Gitanjali Gems has been suspended from trading following the NCLT’s order for insolvency resolution process.
Here is the performance of diamond and jewellery stocks in 2018 -
Source : Ace Equity
PC Jeweller was the worst hit jewellery stock when the reports were out stating that its promoter gifted some of his stake to family members through undisclosed off-market transactions. The buyback offer too was later cancelled which further hurt the stock.
The gems and jewellery sector contributes ~14 per cent to India’s overall exports. The exports of gems and jewellery during April-November 2018 fell by 6.7 per cent on YoY basis. As per ICRA, the demand for gold jewellery would grow by 6-7 per cent in medium to long-term period.
Meanwhile, on Wednesday, the price for 10 gm of 24k gold was at Rs 33,410, which grew by 7.2 per cent from Rs.31,150 as on January 16, 2018.