Jewellery stocks rallied up to 4% on Friday, tracking a sharp rise in gold prices. Shares of Titan Company, Senco Gold, Kalyan Jewellers India and other jewellery stocks gained amid heightened investor interest in the sector.
Sky Gold and Diamonds shares rose as much as 4.07%, while Senco Gold share price gained over 3%. Kalyan Jewellers India shares advanced more than 2%, and Titan Company shares rose around 0.5%.
The rally in jewellery stocks was supported by the sharp upmove in gold prices, which boosted sentiment towards companies operating in the precious metals and jewellery segment.
In the commodity market, MCX gold prices surged above Rs 1.60 lakh per 10 grams on Friday, while silver prices jumped above Rs 2.46 lakh per kg.
Over the past three sessions, MCX gold prices have risen by more than Rs 6,600 per 10 grams, while silver prices have increased by over Rs 13,000 per kg.
ALSO READ: Urban Company Shares Rise 8% On UBS' Bullish Bet
Why are jewellery stocks rising?
The sharp rise in precious metal prices has kept jewellery stocks in focus, with investors tracking the potential impact of higher bullion prices on demand, margins and inventory valuations.
Sunny Agrawal, Head of Fundamental Research at SBI Securities said jewellery stocks are witnessing buying interest as sharp gains in gold prices improve the value of inventory and support revenue growth for organised players.
“Gold prices have continued to strengthen amid safe-haven demand and global uncertainty, while the upcoming festive and wedding season could provide an additional demand catalyst,” said Agrawal.
Investors are also factoring in resilient jewellery demand, store expansion and the continued shift towards organised retailers. Recent business updates from major players have highlighted healthy underlying demand despite elevated gold prices.
“Overall, the sector is benefiting from positive sentiment around precious metals, improving consumer demand and expectations of sustained growth in the organised jewellery market,” Agrawal added.
ALSO READ: Gold Rush: JPMorgan Initiates On IIFL, Manappuram, Muthoot — Check Target Prices
Meanwhile, according to a recent report by Motilal Oswal Financial Services, India's organized jewellery retail sector is set to accelerate further in the coming years, supported by two structural tailwinds — formalization and increasing premiumization.
It views Titan Company and Kalyan Jewellers India as best positioned to benefit from these trends on the back of their scale, brand strength, store expansion, and execution.
Top Picks
Titan Company and Kalyan Jewellers remain Motilal Oswal's top picks in the jewellery sector. It has a ‘Buy' rating on both the stocks, with Titan share price target of Rs 6,000 and Kalyan Jewellers share price target of Rs 800.
The brokerage also reiterated its ‘Buy' call on P N Gadgil Jewellers shares, with a target price of Rs 800, and maintained a ‘Neutral' rating on Senco Gold shares, with a target price of Rs 430.
Agrawal' top picks in the jewellery sector include Titan Compnay and Sky Gold and Diamonds.
ALSO READ: Catch Stock Market Live Updates Here
Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.