Jan 7 (Reuters) - Shares of Indian jewellery retailers surged after companies reported strong sales growth for the December quarter, driven by robust festive-season demand even as gold prices soared.
Shares of Titan Company (TITN.NS), climbed 4.8% to hit record high of 4,307.80 rupees after the company reported a 40% jump in sales.
Kalyan Jewellers (KALN.NS), and Senco Gold (SENC.NS), also jumped 3.7% and 12.2 %, respectively, after their quarterly sales update.
Spot gold prices rose nearly 12% during the quarter, to close out a calendar year in which the precious metal clocked its steepest rise since 1979, driven by geopolitical uncertainties, rate cuts and robust central bank buying.
"Higher prices did have an impact on volumes, but not on (overall) spending," said Dharmesh Kant, head of equity research at Cholamandalam Securities.
Kant added that jewellery companies also benefitted from higher cash in the hands of people as a result of fiscal policies like GST cuts and income tax relief, as well as low inflation.
Among other companies in the sector, PC Jewellers (PCJE.NS), and Thangamayil Jewellery (THNG.NS), gained 5.2% and 7.1%, respectively, while Tribhovandas Bhimji Zaveri (TBZL.NS), surged 10.5%.
Titan Company was the top percentage gainer on the benchmark Nifty 50 (.NSEI), index, while other stocks were among top gainers in the broader indexes.
CLSA said Titan's sales growth in the third quarter was robust in the context of an exceptional rise in gold prices.
Analysts said the company's gold exchange offer to counter higher prices aided sustained consumer engagement. Nomura, however, cautioned that this could weigh on its margins.
Kant said the sector remains on a strong footing as wedding season sales will likely support growth in the near term.
Reporting by Urvi Dugar and Vivek Kumar M in Bengaluru; Editing by Sumana Nandy and Ronojoy Mazumdar
