Diwali or the Festival of Lights is the biggest holiday in India, which bears the same significance for Hindus as Christmas for Christians. Diwali accounts for the largest proportion of annual sales made by Indian retailers. This holiday is traditionally associated with wealth and gift giving and completes a two-month festival, which is considered the season for buying gold in India.
Preliminary estimates for sales and the mood prevailing among the population did not inspire much hope in retail trade. However, the results produced by Diwali were better than market forecasts. In any case, for jewelers.
According to the consumer confidence survey conducted by the Reserve Bank of India in September, consumers’ perception about their economic situation turned negative for the first time in four quarters as “the cost of living kept increasing.”
Diwali, which is celebrated in October or November each year based on the lunar calendar, initially emerged as a harvest festival. This day was chosen to celebrate the last harvest before winter. India is a country of agricultural communities, whose life is closely linked to factors affecting fertility and crop yields.
The most serious deficit in monsoon rains, which occurred in India in the last three years, was expected to produce a grave impact on gold purchases this season, according to analysts voicing their concern to this effect. It could be especially true for rural areas, which usually account for about 70% of the total consumption of gold in India, the BullionStreet wrote at the time.
"Usually, festival buying starts a month ahead of Diwali. However, this year, the buying picked up only in the last week," said Haresh Acharya, director of Parker Bullion Pvt. Ltd, cited by the Wall Street Journal.
This year, the Festival of Lights "has truly brought some shine on faces of jewelers in India," wrote the JewelleryNetAsia, a Sino-Indian edition, because jewelry sales rose during the holiday as much as 30%. This is 5% more than last year, when the growth was 25%. Indian buyers gave their preference to gold earrings, pendants and bracelets, despite sharply higher prices for the yellow metal.
Jewelry lovers spent on average between $ 370 to $ 740 purchasing small and light-weight jewelry pieces, which enjoyed the greatest demand.
A 25-percent increase in sales was also registered by the Mines and Minerals Trading Corporation. Its sales during this Diwali hit record levels raising almost $ 10 million. According to the company, the good results were due to the release of a new jewelry brand collection, Sunchi.
Perhaps the most unexpected result brought by Diwali was the rise in sales of diamond jewelry by 50% compared with a year earlier. Customers focused their most cherished demand on small diamond jewelry - rings, earrings and pendants. Perhaps, the choice of Indian buyers was influenced by a mass advertising campaign to promote Forevermark diamonds, which was recently launched in the Indian market.
Jewelers say that gold coins were also fast-moving items, while bullions gave their ground as an investment tool.
"Since this is the festive occasion, customers prefer to buy real jewellery with Hallmark certification, in place of just bullions,” Mr. Manoj Jain, owner of Shree Jewellers said.
According to Prithviraj Kothari, director of gold-trading firm RidhiSidhi Bullion Ltd. and a former president of the Bombay Bullion Association, sales during the last week of the Diwali holiday sagged by 30% compared with 2011 and amounted to about 70 tonnes. Last year, the company managed to sell 100 tonnes of gold during the same period.
According to the World Gold Council, India’s aggregate demand for gold in 2012 will decline by almost 19% due to sluggish consumption in the first two quarters. In 2011, it reached 986 tonnes, in 2012 - only 800 tonnes.
Although the results during the Diwali sales period were mixed for different segments of the market, the trend points to improvement and sales growth in the jewelry sector. Jewellers expect that this trend will continue to gain further momentum, because in India the traditional autumn festivals are immediately followed by a wedding season.
Dasha Platonova, Editor in Chief of the Asian Bureau, Rough&Polished
