In a significant market reaction, shares of major jewellery companies, including Titan Company and Sky Gold, fell sharply on Monday following Prime Minister Narendra Modi's renewed appeal to citizens to refrain from purchasing gold for weddings for the next year. The appeal, aimed at conserving foreign exchange reserves, led to a 2% decline in Titan Company shares to Rs 5,015 and a 6.3% drop in Sky Gold shares to Rs 756 on the BSE.
Kalyan Jewellers and Thangamayil Jewellery also saw declines, with their shares falling 6% to Rs 578 and 2% to Rs 5,322, respectively. This marks the second time in recent months that PM Modi has made such an appeal, previously addressing the issue in May at an event in Hyderabad. The Prime Minister's remarks are part of a broader strategy to protect India's foreign exchange reserves amidst global economic uncertainties, rising crude oil prices, and pressure on the rupee.
India, the world's second-largest consumer of gold, imported an average of 60 tonnes of the metal each month during FY26, resulting in a monthly import bill of nearly $6 billion. The cultural significance of gold in Indian households, where it is seen as a symbol of tradition and security, makes the Prime Minister's appeal particularly noteworthy.
“As people lose faith in paper currencies, gold as an alternative will continue to grow.”
John Paulson, Billionaire Hedge Fund Manager
Despite the immediate selloff in jewellery stocks, some experts see a potential long-term opportunity in gold. Jefferies' Global Head of Equity Strategy Christopher Wood and billionaire hedge fund manager John Paulson suggest that the current pullback could be a chance for investors to accumulate gold, predicting a long-term bull run for the precious metal.
As India navigates these economic challenges, the focus remains on balancing cultural practices with macroeconomic stability. Investors and market watchers will be keenly observing the impact of PM Modi's appeal on both the jewellery sector and the broader economy in the coming months.
Background
India remains the world's second-largest consumer of gold, with significant cultural and economic implications tied to its consumption. The Prime Minister's appeal highlights the tension between traditional practices and the need for economic stability.
As India navigates these economic challenges, the focus remains on balancing cultural practices with macroeconomic stability. Investors and market watchers will be keenly observing the impact of PM Modi's appeal on both the jewellery sector and the broader economy in the coming months.
