Demonetisation hits jewellery, realty stocks

Even as gold prices surged to a four-month high on Wednesday, stocks of jewellery and real estate companies plunged on the bourses due to fears of the impact of demonetisation of Rs 500 and Rs 1,000 notes on the sector. While the Tribhovandas Bhimji Zaveri scrip nosedived 14% to Rs 68 on the BSE, the Thangamayil Jewellery stock crashed 12% to Rs 211. The PC Jeweller scrip fell by 9%, Gitanjali Gems and Jewellery 7% and Titan 5.3%.Nearly three-fourths of all jewellery purchases are with cash.
Real estate stocks also took a hit with Indiabulls Real Estate and DLF stocks crashing by 18.5% and 17.5% on the BSE, respectively. “Bullion and real estate sectors have not been reporting their incomes properly. The markets won’t be comfortable in giving them valuations if they don’t report actual income,” said Deven R Choksey, MD, KR Choksey Shares and Securities.
G Chokkalingam, founder and MD, Equinomics Research and Advisory, said, “The outlook for jewellery demand is very bad. The drive against black money will curb demand for gold and jewellery in a big way.”
A Chennai-based jeweller said, “Demonetisation means the economy is going to be slow for the next couple of months and this will reflect on the stock prices as well. Most investments would slow down as the sector would be impacted with reduction in the number of transactions.”