cover story

Dhanteras & Diwali fails to cheer up jewellers

The demand during Dhanteras and Diwali was moderate compared to last year, retailers throughout India observed. However, the slump in gold prices helped boost sales during the festive season.  

According to reports, the demand for gold during Dhanteras, the gold buying festival and Diwali remained moderate compared to last year. Retailers in the city blame the slowdown in economy due to global reasons and poor monsoon for diminished demand for gold this year. After a muted Navratri and Dusshera, gold demand saw a slight pickup, but it was mostly on the back of discounts and festive offers, retailers said.

Gold’s price fell about six per cent in two weeks, following positive economic and jobs data from the United States. Bullion is under a lot of pressure on a rising dollar index. Trading currently at $1,094 an oz in London, gold has slumped from $1,164.56 an oz on October 23. Moving in line, silver’s price fell 6.6 per cent in the same period, to $14.79 an oz.

Jewellery sales up in Dhanteras

Gold jewellery sales are estimated to have jumped by 15-20 per cent on November 10, which was ‘Dhanteras’, considered a most auspicious occasion to buy. The positive sentiment in the market due to slump in gold price encouraged good business on Dhanteras. Gold buying is considered auspicious during Diwali, especially on Dhanteras, where customers are usually seen flocking jewellery stores to buy something made of gold or silver, as a symbolic gesture.

“The demand was moderate but slightly better than last year. Discounts and festive offers were mainly responsible for better footfall,” said Shashank Goyal, Founder, SLG Jewellers to DNA. Goyal said that whatever little demand was generated was on the back of the stock market crash earlier this year which pushed investors to switch from equities to gold, and not due to the festival. Rajiv Popley, Director, Popley Group, one of the largest jewellery retailers on other hand told Business Standard that Dhanteras set a positive trend for gold jewellery purchasers for the Diwali season with between 15-20 per cent growth in sales estimated this day.

A large section of customers bought very small quantities of jewellery to complete the formality of doing so on the day, in anticipation of further price falls. Those who had booked gold ornaments earlier for delivery on Monday also booked an additional quantity because of the price fall. “A lot of spur-of-the-moment buying also happened this year,” said Tanya Rastogi, Director, Lala Jugal Kishore Jewellers.

Jewellery sales in Delhi, according to R K Sharma, Chief Executive at PC Jeweller, were more encouraging than anywhere else. As against the 15-20 per cent growth in jewellery sales elsewhere, PCJ says there was a 40-50 per cent spurt in sales. However gold import estimates don’t quite jell with what jewellers claim. Sudheesh Nambiath, lead analyst at GFMS, said, “In November so far, gold import is estimated at 15-17 tonnes, not impressive in view of the traditional Dhanteras and Diwali festival gold demand.” However, government has cut tariff value for gold sharply which will trigger higher imports from now on.

Diwali sales were lackluster

After a robust Dhanteras, gold sales were lackluster on Diwali, with consumers staying away from purchases amid expectation of a further decline in prices. Many analysts forecast a steep fall in gold if there’s an increase in policy rates in December by the Federal Reserve in the US, as it has hinted it will do. Standard gold opened at Rs 26,050 per 10g at Zaveri Bazaar on November 11 but declined a bit to trade at Rs 26,010 per 10g in the absence of physical buyers. There was, therefore, a third consecutive annual decline in return on investment, down Rs 1,480 or 5.7 per cent from the Muhurat trading day the previous year, in this case from October 23, 2014.

“We recorded robust sales on Dhanteras because of its significance as an auspicious day. Thereafter, demand remained lacklustre as consumers waited for a further price fall on the US Fed’s interest rate hike expectation. A Fed rate hike in December is expected to raise investors’ confidence towards the US treasury, resulting in the dollar’s further strengthening. The dollar’s upward march would bring down other asset classes, including bullion,” said Kumar Jain, Director, Umedmal Tilokichand Zaveri, a bullion dealer and jewellery retailer to Business Standard.

Economic Times reported gold demand has been strong this time, especially as prices of the precious commodity came down to around Rs 26,000 per 10 gram. “Gold monetisation and other schemes have been one of the reasons for keeping the business high,” said Rahul Gupta, director at PP Jewellers.”The fall in the prices of gold over the last few days has also helped the numbers.” However, in Bhubaneshwar, although there was rush in almost all jewellery shops in the Capital City on Monday, the buying was confined to low weight jewellery. Compared to previous years, gold shopping on Dhanteras and Diwali for the marriage season ahead was also limited. Jewellers said the demand for 10 grams of gold and silver coins was more as compared to jewellery. They added that jewellery demand is not much despite prices being lower by over Rs 1,000 per 10 gram compared to previous Dhanteras and Diwali.

The love for gold differs from place to place in India; hence while some parts witnessed moderate sales, some of them saw good increase in sales figures. According to Times of India report, Gold purchases have gone up in the last one month in the city as the decrease in prices coincided with the busy festival and wedding buying season. “With the price fall, consumers are not only purchasing for Diwali, but have also advanced purchases for the wedding season,” said Princeson Jose, Chairman of Prince Jewellery to Times. “The marginal improvement in buying has increased during the festival season,” said Jithendra Vummidi of Vummidi Bangaru Jewellers. “As long as the price is low, more people will buy,” he said.