Jewellery stocks experienced significant declines on Wednesday, with major companies tumbling up to 6% following the government's decision to increase import duties on precious metals. According to reports from The Economic Times, organised players like Kalyan Jewellers and Titan Company were among the worst hit, while the broader jewellery sector faced substantial pressure from the policy change. The fall came after the government doubled the import duty on gold, silver and platinum to 15%, with the revised rates taking effect from midnight. As per CNBCTV18, this marks the third consecutive session of losses for jewellery stocks, with shares witnessing very volatile trading moves on Wednesday, May 13, after a two-day rout wiped out nearly ₹50,000 crore in market capitalisation of these companies cumulatively.
Kalyan Jewellers emerged as the worst performer, tumbling 6% to their day's low of ₹340 on the NSE, while SkyGold And Diamonds Ltd led the decline among other major players. According to CNBCTV18, Thangamayil Jewellery fell over 3% in early trade, and Senco Gold pared losses to trade marginally higher. Titan Company showed relative resilience, declining only 1%, with the stock trading flat after the recent fall as investors judged the selloff as excessive. The sector-wide decline reflects the immediate market impact of the higher import duty structure.
The government has imposed a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC) on gold and silver imports, taking the effective import tax to 15% from the previous 6%. According to The Economic Times, platinum and related precious metal components such as hooks, clasps, clamps, pins and screw backs used in manufacturing will also attract a 10% duty. The government has also increased the duty on gold imported from the United Arab Emirates under a fixed quota system, which earlier attracted concessional duty rates. This represents a significant increase from previous duty levels, directly impacting the jewellery sector's input costs and operational expenses.
The nearly 9% jump in import duty is expected to increase the landed cost of gold and silver, with domestic bullion prices likely to open sharply higher. As per ICICI Direct, MCX Gold June is expected to move in the range of ₹160,000 to ₹168,500, with a move above ₹168,500 potentially pushing prices towards ₹171,000. MCX Silver July is expected to rise towards ₹300,000-₹305,000 level as long as it holds above ₹270,000 level. The increase in import duty is expected to be negative for jewellery companies in the short term, with higher gold prices potentially affecting demand for jewellery purchases, though demand linked to weddings and important occasions may continue due to necessity.
