Jewellery-related stocks have been shining brightly over the last one-year period, setting new record highs with each passing month and rewarding phenomenal returns to their shareholders. This stellar performance can be attributed to a strong spike in gold prices, resulting in improved price realization.
For instance, shares of Kalyan Jewellers India, one of the country’s largest jewellery companies, have soared by 230% since last Diwali. The stock initiated its bullish trajectory in July last year and has maintained the same momentum to date, gaining 465%. Also Read: Diwali 2023: What is ‘samvat’ and why does it hold significance for stock market investors?
Over the last five months, Kalyan Jewellers stock has achieved successive record highs, with a recent peak on November 09 at ₹359.15 apiece. Kalyan Jewellers hit the secondary market on March 26, 2021, at ₹75.3 apiece as compared to the issue price of ₹87. At current levels, the stock is trading 288.50% higher than its IPO price. Also Read: Equity vs Gold: What should you invest in this Diwali?
Similarly, Thangamayil Jewellery has experienced a substantial surge in its share price, leaping from ₹498 apiece to ₹1,343.75 over the past year, delivering an impressive return of 170% to its shareholders.
This recent stock boom has resulted in a stunning 527% gain over the last three-year period. On October 12, the stock recorded a new historic high of ₹1,524.90 apiece. Also Read: Diwali 2023: How should you trade stocks, gold, commodities during special Muhurat session?
Thangamayil Jewellery Limited is in the business of manufacturing and retailing gold ornaments, silver articles, and diamond products and mainly operates out of 54 retail outlets (including TMJL Plus) spread across the southern and western districts of Tamil Nadu.
Meanwhile, Senco Gold, the newly listed stock, has also been moving higher since its listing on July 14, 2023. Considering the current market price of ₹657.40 apiece, the stock is trading 107.40% higher than its IPO price of ₹317. Impressively, in September alone, the stock witnessed a substantial 51.45% surge.
Titan shares, on the other hand, have shown decent performance since last Diwali, yielding a return of 23.30%. However, looking at the long-term performance, the stock has generated a multi-bagger return of 284% in the last five years.
Will these stocks maintain upward momentum post-Diwali?
According to Sonam Srivastava, Founder and Fund Manager at Wright Research, PMS, the rally in jewellery stocks such as Kalyan Jewellers, Senco Gold & Diamonds, and Thangamayil Jewellery, which have seen significant gains, may or may not continue post-Diwali.
“The festive season typically boosts sales, but whether this translates into sustained stock performance depends on various factors. These include consumer demand post-festival season, economic indicators like inflation and interest rates, company fundamentals, and broader market trends,” Sonam said. Also Read: Stock Markets and Diwali 2023: What could be the top challenges before Nifty 50 in Samvat 2080? Analysts explain
“For the outlook over the next year, one would have to consider the industry’s adaptation to shifts like increased online retailing, consumer trends, and potential regulatory changes. The performance of these stocks is also linked to the price of gold, which can affect company margins. Global economic conditions and geopolitical stability, which influence gold prices and investment sentiment towards safe-haven assets like gold, will also play a crucial role,” Sonam added.
Also Read: IRFC, IndiGo, BoB among 9 stocks that crossed ₹1 lakh crore in m-cap since last Diwali
“A lot of buzz usually starts in the market near Diwali and Dhanteras for companies dealing in precious metals. The demand usually soars during the same period. A few jewellery stocks have already rallied on the same buzz and have given good returns to investors. From the current levels, the stock may enter the consolidation zone, and the further movement of the stock prices will depend on the market conditions and the corporate earnings from the respective companies. There will be some buying interest in the stocks, but the rally may turn into consolidation, and the further trend will depend mostly on the market sentiments,” said Atul Parakh, CEO of Bigul. Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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