Jewellery stocks rally 2-7% on import duty hike

Moneycontrol Bureau

Shares of jewellery companies rallied in early morning trade on Wednesday as the government increased import duty on gold jewellery from 10 to 15 percent.

Investors were buying Titan Industries (up 2.6 percent), Tribhovandas Bhimji Zaveri (up 6 percent), PC Jeweller (up 7 percent), Gitanjali Gems (up 4 percent) and Shree Ganesh Jewellery (up 4 percent) riding on the euphoria.

The finance ministry said setting import duty on gold jewellery higher than raw gold duty is aimed more at protecting the domestic jewellery industry than stemming bullion imports.

The hike in import duty on jewellery had been a demand from the industry to ensure the viability of the domestic jewellery manufacturing, and avoid imports of cheaper jewellery from Thailand, Malaysia or elsewhere.

"To protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths' or silversmiths' wares and parts thereof is being increased from 10 percent to 15 percent," the government said in a statement.

Talking to CNBC-TV18 interview, Bhaskar Bhat, MD, Titan says that the import duty hike will not have much impact as market demand for gold is driven by sentiment. However, he feels that import duty hike will help to reduce current account deficit to a certain extent. 

"It is going to make little impact whereas the customs duty hike has increased smuggling. You go to the hawala market, you get gold at Rs 200 lower than what a manufacturer legitimately can import and pay duties and sell gold jewellery at," he said.

At 11:40 hrs Titan Industries was quoting at Rs 223.50, up Rs 1.60, or 0.72 percent, TBZ was at Rs 139.60, up Rs 5.20, or 3.87 percent, PC Jeweller was at Rs 91.20, up Rs 4.35, or 5.01 percent, Gitanjali Gems was at Rs 68.65, up Rs 0.40, or 0.59 percent, Shree Ganesh Jewellery House (I) was at Rs 59.40, up Rs 1.20, or 2.06 percent on the BSE.

(Posted by Nasrin Sultana)