Jewellery Stocks: Titan, Kalyan, PCJ Shares Rally Up To 9%, Hit Upper Circuits After Big Announcements By RBI

Gold stocks were shining on Friday after the Reserve Bank of India (RBI) made a big announcement related to gold loans. Titan which holds dominance in the gold segment, witnessed impressive buying, while jewellers like Kalyan's share price shot up at least 9%. PJ Jeweller hits 5% upper circuits, while Thangamayil Jewellery, Tribhovandas Bhimji Zaveri also surged significantly. However, major gold loans financers like Manappuram Finance and Muthoot Finance witnessed a marginal drop.

At the time of writing, Tata Group-backed gold stock Titan Company surged by 2% to touch an intraday high of Rs 3280. apiece on BSE. Titan is the largest gold stock in terms of market share. As of now, it holds a market value of nearly Rs 2.90 lakh crore.

While Kalyan Jewellers zoomed by nearly 9% and touched an intraday high of Rs 255 apiece. Further, PC Jeweller shares are locked at 5% upper circuit to Rs 27.20 apiece. Tribhovandas Bhimji Zaveri shares also soared by 5% to touch an intraday high of Rs 118.10 apiece, it was near its 52-week high of Rs 125.70 apiece.

Furthermore, Thangamayil Jewellery shares gained by 2% and traded near its intraday high of Rs 1,341 apiece. Vaibhav Global and Rajesh Exports shares were also in the green.

However, Muthoot Finance and Manappuram Finance traded in the red but with a slight downside.

While keeping the policy repo rate unchanged at 6.5%, RBI on Friday decided to increase the monetary ceiling of gold loans that can be granted under the bullet repayment scheme from Rs 2 lakh to Rs 4 lakh for such UCBs who have met the overall PSL target and sub-targets as on March 31, 2023.

RBI said these banks will be required to continue to meet the targets and sub-targets thereafter. Detailed guidelines on the matter will be issued separately.

Meanwhile, the status quo in the repo rate itself comes as a positive factor for gold loan rates. Banks lending rates are directly linked to the key policy repo rate. While the repo rate is a tool for RBI to control inflationary pressures, however, this benchmark rate is also the interest rate at which the central bank lends money to banks during a shortage of liquidity.

With no change in the RBI repo rate, it means that banks will also keep lending rates steady including gold loan rates. This in return enhances demand for gold.

On the latest policy, Shantanu Bhargava, Managing Director, Head of Discretionary Investment Services said, "The RBI had overlooked data in the early aftermath of COVID since the aim was to stimulate the economy & engineer a turn-around. Since changing its stance last year, the RBI has been data-driven. According to the RBI's inflation prediction for Q3 & this FY, today's policy outcome is not surprising. We expect the RBI to retain the status quo unless we see a durable drop in inflation and if steady economic activity continues."

The latest policy is a welcome move for the upcoming festive season when demand for gold is higher.