Expert Analysis of the Global Macro Events & News affecting the Indian Markets – 14 Nov 2023
WEEKLY SYNOPSIS
| Index | 1 Week | 1 Month | 1 Year | 5 Years |
| Nifty 50 | 1.01% | -1.55% | 6.08% | 82.02% |
| BSE Midcap | 2.62% | 1.52% | 28.72% | 118.68% |
| S&P 500 | 1.31% | 2.02% | 11.57% | 61.36% |
| Nasdaq | 2.37% | 2.92% | 23.24% | 90.37% |
A Dhanteras Delight: Decoding Indians’ Enduring Love Affair with Gold
Gold demand sees a significant surge in India during the Diwali season, which falls in October or November each year. Dhanteras, which falls a day before Diwali, is considered highly auspicious for buying gold in India. It is believed that purchasing gold on Dhanteras brings prosperity and wealth in the coming year.
Indians have a deep-rooted tradition of gifting gold on special occasions like weddings and festivals. Diwali being one of the most important festivals in India, is a time when families purchase gold for themselves as well as for gifting purposes. With falling gold prices in the run-up to the current Diwali season, retail purchases of gold jewelry and bars have increased substantially across India. Major jewelry retailers have reported a rise in footfall at their showrooms as consumers are taking advantage of lower prices to stock up on gold for the festive season and upcoming wedding season.
Source: Google Finance
India’s Golden Stash: How Homes Now Hold Over 10% of World’s Physical Gold Reserves
Indians have an intense love for gold driven by deep cultural traditions and a lack of secure investment options. As the economy has grown over recent decades, gold demand has skyrocketed with Indians now holding over 10% of global gold reserves worth over $1 trillion. Several factors contribute to this, including gold’s role in weddings and festivals, its protection against inflation, accessibility even for small buyers, and its status as a trusted asset in the absence of widespread banking. With wealth and incomes rising, India’s gold obsession shows no signs of abating any time soon.
Tried, Tested, and Trusted: Gold Shines as Beacon of Security for Indian Households
For decades, gold has shielded the savings of farmers who see prices fluctuate 20% annually. Since 1980, inflation has averaged 6.25% each year, chipping away at paper assets like cash savings in the bank. Meanwhile, over 40 years an ounce of gold, a tangible asset not linked to any currency, has risen nearly 500% in value on the back of rising demand and purchasing power across the developing world. Even through India’s worst inflationary periods in the 1990s, when prices increased 8-10% compound annual growth rate, eroding much of people’s earnings, gold held steady and maintained its purchasing power.
This stability and preservation of value amid such monetary volatility underscores why rural households, who derive a major part of their incomes from agriculture, secure 20-30% of their post-harvest incomes in gold. For generations, 1kg of the yellow metal has retained purchasing power better than any other asset class. It is this performance that underpins India’s deep-rooted trust and preference for gold as a stable and trusted store of their hard-earned wealth.
Gold Rush: Top Jewelry Brands Gear Up for a Record-Breaking Festive Quarter
The festive season in India brings cheer and much-needed business for the jewelry sector. Kicking off from Raksha Bandhan in August, the celebrations continue through major festivals like Ganesh Chaturthi, Navratri, and Dussehra, and culminate with Diwali in October. After a slow first half of 2023 due to high gold prices and inflation, demand has picked up strongly after the India International Jewelry Show in September. The large B2B exhibition saw orders being placed for the upcoming festive quarter.
Source: The Economist
Major brands are optimistic about surpassing last year’s sales significantly. Their goal is to achieve remarkable sales and outshine previous festive season performances. The upcoming festive quarter presents a prime opportunity for leading jewelry retailers such as PC Jewelers, Kalyan Jewelers, and Tanishq to substantially augment their annual revenues and accelerate business expansion.
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