Gems & jewellery, realty stocks fall over Modi’s anti-black money drive fears

Gems & jewellery and realty stocks extends its losses after PM Narendra Modi hinted that his government may come out with more stricter measures to curb black money


BSE Consumer Durables index fell 6.4% while BSE Realty index fell 5%.Both the indices fell over 20% in last ten trading sessions. Photo: Mint
BSE Consumer Durables index fell 6.4% while BSE Realty index fell 5%.Both the indices fell over 20% in last ten trading sessions. Photo: Mint

Mumbai: Gems & Jewellery and realty stocks extended its losses on Tuesday after Prime Minister Narendra Modi hinted that his government may come out with more stricter measures to curb black money.

Earlier on Saturday, Modi hinted more stricter measures against black money and corruption saying that those holding unaccounted money will not be spared and there is no “guarantee” that no further steps would be taken after December 30 till when people can deposit the demonetized notes.

Unmindful of the growing political opposition and risk to the traditional political constituency of the Bharatiya Janata Party (BJP), Prime Minister Narendra Modi on Sunday stepped up the ante in what he alluded to as the crusade against corruption, Mint reported.

Following up on the move to partially demonetize the currency undertaken last week, Modi warned of an imminent crackdown on benami properties—the enabling law came into effect on 1 November, Mint report added.

Gems and Jewellery stocks like PC Jeweller Ltd fell 23%, Gitanjali Gems Ltd fell 13%, Titan Co Ltd fell 6%, Tribhovandas Bhimji Zaveri Ltd fell 12%, Rajesh Exports Ltd fell 2%.

Realty stocks like Godrej Properties Ltd fell 8.1%, Unitech Ltd fell 8%, Indiabulls Real Estate 7%, Phoenix Mills Ltd 5.3%, Sobha Developers Ltd 5.3%, Oberoi Realty Ltd 4%, Prestige Estate Ltd 4%, HDIL Ltd 3.2%, DLF Ltd fell 3%.

BSE Consumer Durables index fell 6.4% while BSE Realty index fell 5%.Both the indices fell over 20% in last ten trading sessions.

“After the government announcement of banning the usage of Rs500 and Rs1,000 notes, real estate and Jems and Jewellery stocks have crashed as black money has been remained the major drivers for both the sectors over the years. Further adding concerns, PM Narendra Modi latest announcement to take action against ‘benami’ property holders also dented the prospect of real estate sector. The prices of real estate properties are likely to fall in the near term,” said Satish Kumar, research analyst with Choice Broking.

In a surprise move intended to eliminate black money and the growing menace of counterfeit currency notes, the Union government scrapped currency notes of Rs.500 and Rs.1,000 denominations on 8 November.

On 15 November, Mint reported quoting Christopher Wood hat the real estate sector would be the worst hit, and auto and consumer-centric sectors would be impacted too. The positives from a good monsoon and the implementation of the recommendations of the Seventh Pay Commission would lose their relevance for a consumption boost.

According to 9 November Edelweiss Securities report the demand for real estate would be negatively impacted in tier 2/3 and smaller cities which are dominated by smaller developers and where cash component in real estate transactions is significant. In metros/tier 1 cities, the proportion of cash component in real estate transactions has declined significantly and limited mainly to few smaller players.

READ MORE