Prime Minister Narendra Modi's appeal to citizens to curb discretionary spending on gold purchases, overseas travel and fuel consumption has created significant market volatility. Addressing a rally organised by the Telangana BJP at the Parade Grounds in Hyderabad on Sunday, Modi called for postponing gold purchases and foreign travel for one year to save foreign exchange amid the West Asia crisis. Stressing the need to save foreign exchange due to the West Asia conflict, Modi emphasised that due to the West Asia conflict, prices of petrol and fertilisers had increased significantly. The government's push comes amid rising geopolitical tensions in West Asia and concerns over India's foreign exchange reserves. As per PTI, Modi emphasised that the Centre is trying to shield people from the adverse impact of the conflict in West Asia, suggesting reducing petrol and diesel consumption, using metro rail services in cities, carpooling, increased use of electric vehicles, utilising railway services for parcel movement, and working from home to conserve foreign exchange.
Gold jewellery stocks faced heavy selling pressure on Monday, with Titan shares emerging as top Nifty loser by falling 7% at 9:50 am on May 11, despite the stock touching its all-time high level on Friday after reporting strong March quarter results. Sky Gold And Diamonds Ltd fell sharply by 12.24%, Senco Gold cracked 11%, Kalyan Jewellers tumbled 9.99%, Thangamayil Jewellery tanked 9.79%, Tribhovandas Bhimji Zaveri lost 6.83% and PC Jeweller dropped 5.67% on the BSE, according to PTI. Other jewellery stocks including P N Gadgil, Senco Gold, Thangamayil Jewellery, BlueStone Jewellery and Sky Gold and Diamonds tumbled around 9 per cent. As reported by Bonanza, India's gold import bill surged to a record $72 billion in FY26 from $58 billion in FY25 despite lower import volumes, while higher crude prices due to the West Asia conflict have widened the trade deficit and pressured the rupee. Despite reporting strong earnings for the March quarter, with Titan achieving a 15-quarter high on-year growth in revenue led by its jewellery portfolio and Kalyan Jewellers consolidated net profit more than doubling year-on-year, the appeal may slow discretionary purchases and create cautious sentiment across bullion and jewellery-related businesses. Market experts now fear possible government measures to curb gold imports, which could impact demand, inventory valuations and even gold financing companies like Muthoot Finance and Manappuram.
Among travel and tourism-linked stocks, InterGlobe Aviation, the parent company of IndiGo, plunged 5% to ₹4,299.40 on the NSE amid concerns that moderation in leisure and international travel demand could impact passenger traffic growth, according to The Hindu BusinessLine. Hospitality stocks such as ITC Hotels, Mahindra Holidays & Resorts India, Indian Hotels Company, Leela Palaces and Chalet Hotels were also down 1-3 per cent. Online travel booking-related stocks also saw selling pressure, with Le Travenues Technology falling 3% to ₹163.10 and Yatra Online tanking over 5% to ₹102.31. As noted by Bonanza, the outbound tourism and aviation segment appears more vulnerable because overseas vacations and destination weddings are discretionary expenses that consumers can postpone easily. The equity market reflected broader concerns with the 30-share BSE Sensex tanking 1,082.40 points to 76,243.56 and the 50-share NSE Nifty dropping 309.45 points to 23,865.10 in morning trade. Nifty Consumer Durables fell the most on May 11, with the sectoral index falling by over 3.5%, reflecting the widespread impact across discretionary spending sectors.
According to PTI, V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, described PM Modi's appeal as a crisis management response to the current account deficit problem caused by high crude prices. He noted that this call for austerity has slightly negative implications for economic growth in FY27, particularly affecting industries related to the austerity call like petroleum, chemical fertilisers, gold, air travel, hotel and related sectors. Jateen Trivedi, VP Research Analyst at LKP Securities, explained that PM Modi's remarks on delaying gold purchases should be viewed primarily from the perspective of India's macroeconomic stability and import management. He emphasised that India is one of the world's largest gold importers, and during periods of elevated crude oil prices and global uncertainty, high gold imports put additional pressure on the country's trade deficit and the rupee. The timing of the statement is important because India is facing a combination of higher crude prices, geopolitical tensions linked to the US-Iran situation, and pressure on the currency due to rising import bills. As noted by Bonanza, the jewellery sector faces a near-term demand overhang as the PM's appeal to defer gold purchases for a year could dampen sentiment ahead of the wedding and festive season, though Indian gold demand is culturally sticky and rarely responds durably to verbal appeals without policy backing like duty hikes.
According to Bonanza, the jewellery sector may see near-term demand pressure ahead of the festive and wedding season, although India's culturally entrenched gold demand is unlikely to witness a lasting impact without policy measures such as higher import duties. The analyst noted that domestic tourism, hospitality and resort operators could benefit if travellers increasingly shift towards local vacations instead of overseas travel. However, experts suggest the appeal is unlikely to significantly change long-term Indian demand for gold because gold remains deeply linked to savings, investment, and cultural buying patterns. Despite the current market volatility, most brokerages remain "constructive" on the growth in Titan's jewellery segment on the back of higher gold prices, with stability in gold prices further improving margin visibility. Brokerage firms have maintained their ratings on the stocks while slightly revising the estimates upwards for earnings per share, revenue, and net profit. The government's appeal to reduce gold purchases is aimed at easing pressure on India's forex reserves amid elevated crude oil prices and rupee weakness, as reported by The Hindu BusinessLine.
