Gold Silver Reports – The Report for Indian jewellery retailers in FY17 is likely to be stable on robust domestic demand but exporters may face headwinds, according to rating firm Ind-Ra.
Ind-Ra expects jewellery demand to remain robust and grow at 3%-5% in 2016 to 670-685MT driven by wedding related purchases. The demand has remained steady at 600-670MT in the last few years despite gold price volatility, according to World Gold Council data.
Ind-Ra expects an improvement in demand for coins and bars as consumers seek gold’s wealth protection properties in the backdrop of a high economic and political uncertainty globally, turmoil in equity markets, and weakening in domestic currency.
Exporters are likely to face temporary headwinds with slowing Chinese demand for diamond jewellery. Also, they are likely to have limited headroom to withstand further pressure on margins due to divergence in rough and cut and polished diamond (CPD) prices as rough price index remained higher than polished price index during FY13-FY15, Ind-Ra said.
Reintroduction of any measures to curb gold imports or restoration of any excise duty is likely to have a negative impact on the sector. Also, any severe fall in supply of mined gold globally can lead to higher gold prices and may dampen gold consumption. Recovery in Chinese demand, a buoyant US demand for diamond jewellery, and an improvement in CPD prices relative to rough prices are likely to have a positive impact on exporters. – Neal Bhai Reports