Prime Minister Narendra Modi’s advisory on ways to tackle the West Asia crisis has sent the stock markets on a downward spiral. Several jewellery stocks like Senco Gold, Kalyan Jewellers India, P N Gadgil Jewellers, Titan Company, and many others cracked as much as 10% in today’s trade after the PM called upon postponing gold buying and avoiding non-urgent foreign travel.
As a result of this advisory, even travel and tourism stocks were under pressure. The share price of InterGlobe Aviation dropped over 5%, GMR Airports dropped 4%, Spicejet declined 3.5%, and others followed the league.
What did PM Modi advise?
Prime Minister Narendra Modi has advised Indians to adopt “economic self-defence” measures, including reviving work-from-home habits, reducing fuel consumption, postponing foreign travel or weddings, and limiting gold purchases for one year to help the country conserve foreign exchange. This was prompted by rising global oil prices and economic disruption caused by the West Asia conflict.
“We got into work-from-home, virtual meetings, video conferencing, and many other methods during COVID-19. We got habituated to them. The need of the hour is to resume those methods,” Modi said.
How are gold prices trading?
Spot gold ended last week higher by 2% to settle at $4,715.3 per ounce, recovering sharply after posting losses in the previous two weeks amid easing expectations around the US-Iran conflict and optimism surrounding a possible peace agreement, wrote Kotak Securities in a research note.
However, in the international markets, gold prices fell in early morning trade today after posting weekly gains, pressured by a firm dollar and elevated oil prices after President Trump rejected Iran’s latest response to a US-backed peace proposal.
Markets had earlier rallied on optimism that Washington and Tehran could reach a deal to ease tensions in the Gulf and normalise shipping flows through the Hormuz Strait, through which nearly a fifth of global oil consumption passes.
What’s the big concern
According to several gold retail business experts, the PM’s advisory may impact demand for gold jewellery in the near term. Additionally, there are also concerns about whether this could lead to the imposition of any near-term duties. However, for now, it is a wait-and-watch scenario as the markets will keep a close eye on the next move by the government.
