Traders pick jewellery again, hope gold's sparkle rubs on

Jewellery stocks have gained traction over the past week after failing to earn returns in the previous three months. The stocks were under pressure on account of concerns over rising gold prices which may affect demand. However, companies expect to maintain the growth momentum in the March quarter as high prices are likely to support the top-line growth amid slower volume growth. Store expansion and rising average transaction values are key growth drivers for the sector.

Listed jewellery companies including Titan Company, Kalyan Jewellers, PN Gadgil Jewellers, Thangamayil Jewellery, and Senco Gold have gained 2-20% over the past week compared with 4-40% drop over a three-month period. Fluctuating gold prices continue to be a double-edged sword for jewellery retailers. While higher prices boost revenue, they also impact affordability leading to softer volume growth. However, demand, among other factors, also depends on seasonal factors such as weddings and festivals.

Notwithstanding short-term price pressures, jewellery retailers are doubling down on expansion strategies, signalling confidence in long-term demand. Kalyan Jewellers plans to open 170 new stores in FY26, with 45 stores expected by the end of the March 2025 quarter. Titan added 46 new stores in the December quarter, bringing the total count to 1,055. PN Gadgil is targeting 25 store additions in FY26, including 10 outlets under its new format, LiteStyle by PNG, which aims to attract younger customers with modern designs.

While store additions prepare