Jewellery shares came under selling pressure for a second straight day, with branded jewellery maker Gitanjali Gems falling by its daily limit of 20 per cent to Rs 324.30. Among other jewellery stocks, Tribhovandas Bhimji Zaveri traded 3.3 per cent lower at Rs 176 following the 7 per cent cut on Monday. PC Jeweller traded down 3.8 per cent after falling 10 per cent on Monday. Shares in Titan Industries, which witnessed sharp selloff earlier this month, traded flat.
Here's why jewellery shares are under pressure
On Monday, the All India Gems & Jewellery Trade Federation asked jewellers to suspend sale of coins and bullion bars to retail buyers. The federation has also appealed investors to defer coin and bar purchases.
On Friday, Anil Ambani promoted firm Reliance Capital had suspended sale of physical gold and all gold related investment products.
Over the past month, the Reserve Bank has put out several guidelines to dissuade gold imports. It has mandated that all imports of gold for domestic consumption can be made only with 100 percent cash margin to curb the supply side.
The government, too, has been taking steps to bring down import of gold. Earlier this month, the government increased import duty on gold by a third to 8 per cent.
All these steps have been taken to bring down gold imports in India, the second biggest import item after crude oil. India is the world's biggest buyer of bullion and rising gold imports contribute to higher current account deficit. India's current account deficit hit a record high of 6.7 per cent in the December quarter. Rising current account deficit has pressured the rupee, which hit a record low of 59.98 last week.
