Prime Minister Narendra Modi’s clarion call urging citizens to pause gold purchases for a year has cast a dark shadow over jewellery stocks, with Kalyan Jewellers emerging as one of the biggest casualties. Already reeling under weak market sentiment and its exclusion from the MSCI Standard Index, the stock plunged to a fresh 52-week low on Wednesday, extending its steep correction to over 40% in less than 10 months. With sentiment battered by policy headwinds and technical weakness, analysts believe the near-term outlook for the stock remains fragile despite strong underlying fundamentals.
Moreover, to discourage gold imports and mitigate the rupee fall, the government hiked import duties from 6% to 15% on Tuesday.
In the last three sessions, Kalyan Jewellers shares have corrected 16% amid significant selling pressure in most jewellery stocks. Between Kalyan Jewellers, Thangamayil Jewellery, Sky Gold, Senco Gold and Titan Company, the investors' wealth has eroded by nearly Rs 60,000 crore.
The market capitalisation has fallen by Rs 7,229 crore between May 8 and 13 while investors have suffered losses of Rs 27,130 crore from the 52-week peak of Rs 617.70 which the stock hit on July 24, 2025.
Dr. Ravi Singh, Chief Research Officer from Master Capital Services attributed Wednesday's fall to new lows to the panic selling by investors. From a technical perspective, the chart has turned extremely weak in the near term, he said. "The stock has decisively broken below its primary descending trendline and key horizontal supports, while the RSI has moved into the oversold zone at 30.48, indicating that bearish momentum is currently dominant. The significant spike in volume during this fall suggests institutional distribution and a risk-off sentiment across the sector," Singh said. In his view, the import duty hike will likely weigh heavily on demand and margins in the coming quarters.
Kalyan Jewellers shares are trading in an extremely oversold zone (MFI at 26) and have slipped below their 50-day and 200-day simple moving averages (SMAs) of Rs 403 and Rs 467, respectively, according to Trendlyne data.
Kalyan Jewellers' continued underperformance had an undesirable effect with MSCI removing the scrip from index. The change will be effective at the close of trade on 29 May.
The recent developments have taken away the sheen of the company's stellar Q4FY26 results declared on Friday. The company reported a net profit of Rs 410 crore for the March quarter of FY26, more than doubling (118.2%) from Rs 187.6 crore recorded in the corresponding period last year. Revenue from operations rose 66% year-on-year (YoY) to Rs 10,275 crore, compared with Rs 6,182 crore in the year-ago quarter.
EBITDA increased 84.2% to Rs 735.7 crore versus Rs 399.4 crore reported a year earlier, while the EBITDA margin also improved to 7.2% from 6.5% in the corresponding quarter last year.
Notwithstanding the correction, Dr. Singh vouched for its "robust" fundamentals led by aggressive showroom expansion and a strong market share in the organised retail space. "The Rs 330 – Rs 340 area now becomes a critical must-hold support zone, while a recovery back above the Rs 380 level would be necessary for sentiment to stabilise again," this analyst said.
Kranthi Bathini, Director-Equity Strategy at WealthMills Securities, advised investors to avoid the stock for now, citing heightened volatility and the negative sentiment stemming from the Prime Minister’s austerity appeal, which he believes could weigh on near-term investor sentiment.
In his view, the duty hike could likely hit the company's margins and profitability. But he said that gold consumption is way of life in India and it will be interesting to see how the austerity appeal by Modi plays out.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
