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Gem, jewellery exports fall 11.24% on US, China trade war and poor demand

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A sales person shows gold ornaments at a jewellery shop, on the occasion of


India’s gem and jewellery exports fell 11.24 per cent to $2707.90 million in July compared to $3050.68 million the same period last year, as the US-China trade war and poor consumer confidence dragged down business.


The sector’s gross exports declined by 9.32 per cent to $12.15 billion between April and July compared to $13.39 billion during the same period last year, according to data compiled by the Gem and Jewellery Exports Promotion Council (GJEPC).



Exports fell after the Union Budget increased the duty on imported gold BY 2.5 per cent to 12.5 per cent and the decline is the worst in the last four months.


Cut and polished diamonds saw the sharpest full: exports declined 18.29 per cent to $1.50 billion in July as compared to $ 1.84 billion in July 2018.


This is because retail chains are holding a huge stock of polished diamonds and globally major consuming centres’ channel inventories are high, Nimesh Patel, chief financial officer of DeBeers, had told Business Standard in a recent interview.


Mining companies have reduced prices of rough diamonds because polished diamonds prices are low on high inventories.


Cut and polished diamonds exports from April to July 2019 were lower by 17.54 per cent to $ 6.70 billion from $ 8.13 billion registered during April to July 2018. High polished diamonds inventories and lower price of polished diamonds are prevailing since last several months affecting global business.


Apart from a slowing market, Indian exporters also face pressure from high customs duty


Even gold jewellery exports were down in July 2019 by 5.78 per cent to $ 963.08 per cent from $ 1022.18 per cent in July 2018.


Exporters were already facing issues of delay in refund they were claiming for GST. This was blocking their working capital at a time when banks are very tough in providing working capital for this export industry. Annual gem and jewellery exports have been around $40 billion around 13 per cent of India’s total exports and not providing working capital to the sector or keeping very tough norms despite several regulatory changes and closing loopholes in last one and half year has started acting as detrimental to the exports from this sector.


“Next quarter will be worse if there is no respite,” said Colin Shah, vice chairman of Gem and Jewellery Export Promotion Council (GJEPC).


Gold jewellery exporters are discouraged they have to pay duty and later seek refund including GST paid. This refunds further blocks their working capital and increase cost. Annual exports from DTA is around $3 bn.


In April-July 2019, gold jewellery export was down 4.80 per cent to $ 4.09 billion from $ 4.29 billion in April-July 2018.


Exports of silver jewellery and colour gsm stones increased sharply by 97 per cent and 10 per cent respectively but exports of both categories together was $437 millions in April to July 2019, according to GJEPC data.

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Market Updates

324 stocks hit lower circuit on BSE; Reliance Capital tumbles 24% intra-day

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stock market

Over 300 stocks were frozen in their respective lower circuit band on the BSE on Thursday amid a sharp sell-off in equities with the benchmark indices falling over 1.50 per cent on Thursday.


As many as 324 stocks or 12 per cent of the total 2,597 traded stocks on the BSE were locked in the lower circuit and saw only sellers on these counters today. Of these, around 104 stocks belonged to the ‘X’ group, 81 stocks were from XT group, followed by B group (67), T group (44) and Z group (16), the exchange data shows.


Eight stocks – Thomas Cook India, Sterlite Technologies, CG Power and Industrial Solutions, Eveready Industries, Jet Airways India, Bliss GVS Pharma, Reliance Communications and Indiabulls Integrated Services – from the S&P BSE 500 index hit their respective lower circuits during the day.


“The delay in addressing concerns of foreign investors regarding taxation and slowdown in the economy is seeing foreign selling continue with over US$2.5 billion being the collateral damage since the budget,” IIFL Securities said in a client note.


Thomas Cook India (Rs 129), Sterlite Technologies (104) and Housing Development and Infrastructure (Rs 7) were frozen at 20 per cent lower circuit limit on the BSE.


Reliance Capital tanked 24 per cent to Rs 30 in the intra-day trade. It finally settled 20 per cent lower at Rs 32 on the BSE. Stocks trading on future & option (F&O) segment, don’t have any circuit limits.



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Market Ahead, August 22: All you need to know before the Opening Bell

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Markets, Investors, Indices, Stocks


Investors are expected to react to market regulator Sebi’s board decision to ease requirements for foreign portfolio investors (FPIs).


The regulator said FPIs would no longer be required to meet the ‘broad-basing’ criteria, under which at least 20 investors were required to establish a fund. It also said, it would rationalise the framework for issuance of participatory notes (P-notes), an instrument once very popular with overseas investors.



That apart, market participants will take cues from the minutes of the RBI’s August monetary policy committee (MPC) meet released yesterday that showed that all three internal members had voted unanimously for a cut of 35 basis points to support economic growth.


Besides, global cues, rupee trajectory, foreign fund flow, stock-specific action, and oil price movement would be on investors’ radar.


Now, let’s see what global markets indicate for Sensex and Nifty.


Asian shares edged higher on Thursday, taking cues from gains in the US stocks. MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1%, Japan’s Nikkei added 0.4% and Australian shares 0.3%.


At 8:00 am, SGX Nifty, the Singaporean Exchange for Nifty Futures, was down 22 points, indicating a flat to negative start for domestic indices.


On Wednesday, the Sensex settled 0.72 per cent lower at 37,060 level, and the Nifty50 closed at the 10,919-mark, down 0.89 per cent.


The Rupee closed at 71.55, up 16 paise against the US dollar.


And, before we wrap, here’s a look at the top headlines that are likely to move markets–


>> The government, on Wednesday said, it has set no deadline to ban the production of petrol, diesel vehicles or for automobile manufacturers to switch to EVs


>> Government, on Saturday, is expected to hold meeting with economists to discuss economic slowdown.


At last, stock recommendation for the day by Tradebulls Securities–


The brokerage recommends selling Tata Steel at current levels. The stock is expected to drift lower till Rs 321 price confluence zone. Hence, the stock can be sold with stop above previous sessions high of Rs 358.

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Market Updates

Charticle: Where FPIs, MFs increased/decreased their stake in June quarter

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Investments


Equity markets witnessed some sharp upmove in the first half of the calendar year 2019 (CY19), first on the anticipation of the return of the Narendra Modi-led government to the power and then, hopes of desired reforms from the continuing government. The period did see benchmarks, S&P BSE Sensex and the Nifty50, touching their all-time highs of 40,312 and 12,103.05, respectively on June 4, 2019. However, the rally was short-lived as a couple of market unfriendly Budget proposals on July 5 triggered downward trajectory in the stocks.


That said, for the quarter ended June 30, 2019 (Q1FY20), the Nifty50 index has given a modest return of around 1.50 per cent while the S&P BSE Sensex of BSE has gained nearky 2 per cent. The S&P BSE 200 index has remained flat with just 0.38 per cent gain, ACE Equity data show.


During the period, overseas investors (FPIs) infused a total of Rs 31,700 crore in the equity market and FPI ownership in the BSE200 index increased to $444 billion in the June quarter from $433 billion in the March quarter, said a recent report by Kotak Securities.


Top sectors that witnessed FPI buying included financials, insurance, oil, gas and telecommunication services.


Among individual stocks, Gruh Finance, Mahindra Logistics and Godrej Properties saw substantial sequential increase in FPI holdings while they sold large stakes in YES Bank, Dish TV and DLF. Mutual Funds, on the other hand, increased their stake in Emami, Shriram Transport and Vodafone Idea and reduced stake in India Cements, Apollo Tyres and YES Bank, as per the report.


Here’s a look at the top five stocks and sectors where FPIs and MFs increased or decreased their stake in June quarter –

Top five companies where FPIs raised their stake include Gruh Finance, Mahindra Logistics, Godrej Properties, Shriram Transport and SBI Life Insurance while top firms where FPIs decreased their stake during the quarter under review include YES Bank, DishTV, DLF, Escorts, Indiabulls Housing.
Top five companies where MFs increased their holding were Emami, Shriram Transport, Vodafone Idea, BHEL and DCB Bank. On the flip side, they reduced their holding in companies such as India Cements, Apollo Tyres, YES Bank, Graphite India, PVR.



Sectoral ownership







Top five sectors which caught FPIs’ fancy were telecom, diversified financials, insurance, oil, gas & consumable fuels, electric utilities, capital goods. Information technology (IT) services, construction materials, banks, pharma, consumer durables are the top sectors that they were underweight on.



MFs’ bought Telecom, banks, pharma, consumer staples and construction materials during the said period whereas they lowered their investments in Oil, gas & Consumable fuels, Fertilizers and agriculture, Electric Utilities, Gas Utilities, IT services.

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