Bengaluru Real Estate and Jewellery Stocks Fall for Second Day Amid PM's Austerity Call

Bengaluru-based real estate stocks and jewellery stocks continued to see selling pressure for the second straight day on May 12, after Prime Minister Narendra Modi urged Indians to curb gold purchases for the next year and work from home to mitigate the fuel crisis amid the West Asia conflict.

Bengaluru-based real estate stocks like Brigade Enterprises, Prestige Estates, and Puravankara fell up to 3%, while jewellery stocks like Titan, Kalyan Jewellers, and Senco Gold declined up to 5%.

According to JM Financial, the PM’s speech should be considered as a market signal before the actual measures are announced in the coming weeks if the conflict continues. Such fiscal and monetary measures would help cushion the currency (INR) from further depreciation.

JM Financial also expects the government to adopt a gradual approach. This could involve increasing fuel prices in tranches, temporarily reducing Limits on Remittances under the Liberalised Remittance Scheme (LRS), and hiking duties on gold imports as the lean wedding season approaches.

It is worth noting that oil accounts for 20% of India’s total imports, gold for 9%, and fertilisers for a manageable 2%. Around 58% of total remittances ($30 billion in FY25) under the LRS is for international travel, while remittances for investments in equity have more than doubled to 8.4% compared to 3.1% in FY19. Therefore, the PM’s speech was targeted and should be seen as a precursor to actual austerity measures if the conflict in West Asia lingers. A prolonged conflict could moderate GDP growth to 6–6.5%, and the Current Account Deficit (CAD) could deteriorate to 1.9% of GDP, as inward remittances will also be at risk. Among other measures, the government should focus on increasing strategic petroleum reserves, JM Financial said.

Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, emphasized that PM Modi's remarks on delaying gold purchases should be viewed primarily from the perspective of India's macroeconomic stability and import management.

India is one of the world's largest gold importers, and during periods of elevated crude oil prices and global uncertainty, high gold imports put additional pressure on the country's trade deficit and the rupee, Trivedi explained.

The timing of the statement is crucial because India is currently facing a combination of higher crude prices, geopolitical tensions linked to the US-Iran situation, and pressure on the currency due to rising import bills, he added.

While the appeal is unlikely to significantly change long-term Indian demand for gold, as gold remains deeply linked to savings, investment, and cultural buying patterns, it may slow discretionary purchases, particularly in jewellery demand, and create cautious sentiment across bullion and jewellery-related businesses, Trivedi concluded.

Khushi Mistry, Research Analyst at Bonanza, noted that the jewellery sector faces a near-term demand overhang, as the PM's appeal to defer gold purchases for a year could dampen sentiment ahead of the wedding and festive season. However, Indian gold demand is culturally sticky and rarely responds durably to verbal appeals without policy backing like duty hikes.