Budget 2025: Why are jewellery stocks attractive despite stock market crash? | Stock Market News
Budget 2025: Jewellery stocks defied the broader market weakness on February 1, rallying after Finance Minister Nirmala Sitharaman announced a reduction in customs duty on jewellery in the Union Budget 2025. Additionally, the new tax regime offers income tax relief for individuals earning up to ₹12 lakh, which is expected to boost household consumption, savings, and investment. This policy change has reinforced confidence in the jewellery sector, supporting stock prices despite the market downturn.
Jewellery Duty Cut to Boost Demand
The Finance Minister announced a customs tariff reduction for articles of jewellery and parts from 25 percent to 20 percent, effective February 2, 2025. Additionally, the duty on platinum findings has been slashed from 25 percent to 5 percent, making imports more cost-effective and enhancing profitability for jewellery manufacturers and retailers.
Colin Shah, MD, Kama Jewelry, welcomed the move, stating, “The reduction in jewellery duty is a welcome move for a country like India, known for its high jewellery consumption. This will boost domestic demand, particularly in the luxury segment. The sharp cut in platinum duty will also benefit the entire gems and jewellery industry.”
Apart from the customs duty reduction, the Budget included other pro-business measures benefiting the jewellery sector. The turnover limit for MSMEs has been raised from ₹250 crore to ₹500 crore, allowing small and mid-sized jewellery manufacturers greater access to government schemes and credit facilities. Additionally, the removal of IGCR conditions for duty-free imports of Lab-Grown Diamond (LGD) seeds is expected to increase demand for LGDs. Another significant move is the introduction of separate HS codes for platinum and gold alloys, which will help curb malpractices and ensure fair trade in the industry.
Jewellery Stocks Rally Amid Policy Boost
Following the Budget announcements, jewellery stocks surged, reflecting optimism over policy-driven growth.
Senco Gold jumped 8.6 percent to ₹510.25 while Motisons Jewellers climbed 5 percent to ₹25.05. Kalyan Jewellers advanced 5 percent to ₹526.30, Titan Company rose 4 percent to ₹3,632.75 and Thangamayil Jewellery added 2 percent to ₹1,865.
The strong rally highlights investor confidence in the jewellery sector, particularly as reduced import duties lower costs and enhance margins for major players.
Unmet Industry Expectations
Despite these positive measures, the industry had higher expectations from the Budget, which remained unaddressed. Stakeholders were hoping for a further reduction in gold import duty, which remains a key cost factor for jewellers. Additionally, there were calls for a dedicated regulator for digital gold to enhance transparency and investor trust. Another major demand was more favorable terms under the gold monetisation scheme, which aims to reduce reliance on imported gold by encouraging households to deposit idle gold with banks.
While these concerns persist, the customs duty cuts and tax benefits are seen as major growth drivers for the sector. The policies announced in Budget 2025 strengthen domestic demand, improve cost structures, and enhance investor sentiment, making jewellery stocks attractive investment opportunities despite overall market volatility.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
