Buyers' reluctance to touch the Gitanjali Gems stock despite the 60 percent drop in share price,could indicate that they are not convinced about the company's numbers.
Gitanjali Gems plunged 57 percent from Rs 547.85 to Rs 233.90 in eight consecutive sessions since June 19, on concerns that the fall in gold prices and recent RBI norms on gold imports would hurt earnings. SP Tulsian of sptulsian.com also feels the sell-off was triggered by margin call pressure.
Three consecutive day fall has wiped out 19.54 billion rupees, or half of its market capitalisation, as India looks to curb gold imports to improve a current account deficit that hit a record high in the October-December quarter
One may see 10 percent lower circuit in Gitanjali Gems, says SP Tulsian of sptulsian.com.
Gitanjali Gems hit the 20 percent lower circuit for the second straight day. The company says recent RBI and government initiatives to curb gold imports will hurt earnings.
Abhishek Gupta, president, Gitanjali Gems, says gold companies face immediate working capital pressures due to recent RBI guidelines, which prohibit jewellers to buy gold on credit.
SP Tuslian of sptulsian.com says he won't be surprised to see Gitanjali Gems correcting to a level of Rs 300-320.
Gitanjali Gems was the biggest loser among the jewellery stocks, down 20 percent to its lower circuit limit in morning trade. Others like TBZ and PC Jeweller also tumbled 13 percent and 10 percent respectively.
SP Tulsian of sptulsian.com feels Titan Industries may settle around Rs 224-225 levels in short term.
According to Titan, credit for gold import has been prohibited by RBI, which will affect import of gold through all non-consignment routes like gold on lease.
Despite the duty hike, gold imports reached at a staggering USD 15 billion in the last two months. On Monday, Finance Minister P Chidambaram echoed his concerns after gold imports touched 162 tonnes in May
Gems and jewellery company Gitanjali Gems which is also a star trading house sees a marginal impact on the gold it imports directly following RBI's new gold import rules.
Kunal Bothra of LKP is of the view that, ITC is expected to decline towards the level of Rs 322 in next two to three days. Keep a strict stop loss of Rs 340, he advised.
Gitanjali Gems has reported a sales turnover of Rs 4,750.53 crore and a net profit of Rs 118.88 crore for the quarter ended Mar '13
Gitanjali Gems rallied 5.5 percent intraday to touch a new 52-week high of Rs 637.50 on Monday after the company announced the merger of Gems London Company with Tokyo based lmacbc Company.
India Ratings & Research (Ind-Ra) believes that the impact of the recent correction in gold prices on the domestic jewellery industry will be mixed and will depend on the gold sourcing norms of specific jewellers.
One can buy Gitanjali Gems at current market levels as the stock is expected to test Rs 650 level in near term, says Rahul Mohindar of viratechindia.com.
One can buy Gitanjali Gems, says Sudarshan Sukhani of s2analytics.com.
Technical analyst, Sudarshan Sukhani, s2analytics.com said that traders who do not have position or who exited yesterday, a correction today would provide an opportunity to reenter.
The stock of Gitanjali Gems shot up 5 percent on Thursday after the company has decided to defer issue of foreign currency convertible bonds (FCCBs).
SP Tulsian of sptulsian.com is neutral on Gitanjali Gems.
CRISIL Research has come out with its report on Gitanjali Gems. According to the research firm, the share of the jewellery business of the company is expected to remain in the 58-62% range in FY14.
In an interview to CNBC-TV18, Sudarshan Sukhani of s2analytics.com, SP Tulsian of sptulsian.com and Amit Trivedi of Fin Stream Financial Advisors give top pick for the day.
Firstcall Research is bullish on Gitanjali Gems and has recommended buy rating on the stock with a target price of Rs 642 in its February 23, 2013 research report.
Gitanjali Gems gained more than 2 percent intraday on Friday after the board of directors of company approved raising funds via Foreign Currency Convertible Bonds (FCCBs) due 2018 on Thursday.