Adda Ghar: Akshaya Tritiya

(This entry was originally published in April 2009 and is based on the context of that time.)

Akshaya Tritiya is one day away and Indian jewelry traders are very much excited that they would see some profit in these tough times of economic recession. Though demand of gold has fallen significantly, Akshaya Tritiya accounts for 15% of the annual gold tradings in India. Akshaya Tritiya is one of the four auspicious days according to the Hindu religion calendar. The day is considered to be very auspicious for investments and buying long term assets like gold, diamond, cars etc. Hence, on this day, hundreds and thousands of people in India buys precious metals like gold, platinum and diamond. Unfortunately, prices of gold went record high in February and then recession and credit crunch further decreased the demand.

Now, the good thing is prices of gold has not fallen but prices of platinum has fallen. For this reason, many traders are expecting that a large number of people will buy platinum instead of gold in this year’s Akshaya Tritiya. Indian gold traders are now promoting platinum diamond jewelries. Princeson Jose, Price Jewellery said that last year the price of platinum was double than the gold but this year the price difference is 30%. During the Akshaya Tritiya of 2008 ( first week of May 2008) retail prices of one gram gold was around Rs. 1100 and prices of platinum was three times higher than gold; around Rs.3000 per gram. Current price of gold is Rs. 1350 per gram and platinum is Rs. 2200 per gram which is very much within the range of the consumers.

As a result, many buyers are now going after promoting platinum jewelries instead of yellow or white gold. Prapanna Kumar of Nathella Sampathu Chetty Jewellery Pvt Ltd., a reputed jewelry outlet in Chennai voiced the same opinion. Mr. Kumar said that though price of platinum, like the gold, went down in recent months, it is not as drastic as the gold. Platinum is also used by the automakers. Since the sales of automobiles around the world went down due to recession, prices of the metal went down a bit in the last one year which worked as a boon for Indian jewelry traders.

In order to push up platinum sales during Akshaya Tritiya, the Indian arm of Platinum Guild International are working with various gold retailers in India. Reputed jewelry traders of Southern India including Prince Jewellery, GRT, LKS gold house are promoting platinum jeweleries. However, jewelry traders admitted that Southern India is primarily a gold market.

Last week, famous jewelry retailer Gitanjali Group and MMTC started new retail jewelry chains named Shuddhi. The first Shuddhi store in Delhi has been opened up already and another one in Ahmedabad will be launched on the day of Akshaya Tritiya.

Related articles:

The Economic Times

NDTV

The Hindu BusinessLine

Indian gold industry is now in a jovial mode because Akshaya Tritiya is coming and demand of gold, silver and diamond jewelries have gone up. The year 2009 started with a gloomy note due to the economic melt down. Now, the festival will give boost to the gold business in the country.

Akshaya Tritiya: The Indian Black Friday

Akshaya Tritiya is a Sanskrit word. The word ‘Akshay’ means “one that never diminishes.” According to the traditional Hindu calendar, Akshay Tritiya falls on the day of the “bright half of the lunar month of Vaishakha.” It is one of the four most auspicious days in the Hindu religion. On this day, people buy gold, silver, diamond, precious stones, plots and apartments, and various other long term assets. A week or two before the festival, gold purchase starts to rise. Not only purchase, many big business or new ventures or construction works start on the day of Akshaya Tritiya because it is believed that businesses that start on Akshaya Tritiya would prosper and bring money. In one sense, the Akshaya Tritiya can be referred as the Indian Black Friday. Interestingly, people of all religion in India observes this day. In 2006, Akshaya Tritiya was observed on 30^th April; 20^th April in 2007; 8 May in 2008; and 27^th April in 2009.

Gold business in India:

India is one of the largest gold markets in the world in recent times. Gold is considered to be a symbol of good fortune among Indian people. According to the figures presented by the World Gold Council (WGC), the country’s gold demand stood at 243.2 tonnes, accounting for 26% of the worldwide demand in 2001. That figure has definitely increased over the years. The other major gold consuming country is Turkey. In 2008, GFMS Ltd., one of the top precious metals consultancy firms in the world, published a research paper which indicated that China might supplant India as the top gold consumer in near future. Here is a table of Indian gold consumption since 1999.

Year	INR / 10 gms	Absolute returns as compared to 2008 prices (INR)	Absolute % Returns	Annual RoI
1999	3,850	8,298	216%	24%
2000	4,023	8,125	202%	25%
2001	4,106	8,041	196%	28%
2002	4,827	7,321	152%	25%
2003	5,424	6,724	124%	25%
2004	5,955	6,193	104%	26%
2005	6,296	5,851	93%	31%
2006	8,791	3,356	38%	19%
2007	9,219	2,929	32%	32%
2008	12,147

Source: http://www.indiainfoline.com/news/innernews.asp?storyId=99057&lmn=1

Like the Akshaya Tritiya, there is another gold buying festival that takes place in October.

Each year, India imports around 700tonnes-800 tonnes of gold. In 2008, gold imports went down 48% to 396 tonnes from 759 tonnes in 2007. Price of gold rose about 46% since April 2007.

Women, especially housewives, are the core buyers of gold jewelries. Aside from wearing gold ornaments, they consider gold as a valuable asset. In the last ten years, India observed an average of 26% return on investment in gold.

In April 2009, India will import 25 to 30 metric tonnes of gold. On April 17, 2009, Suresh Hundia, President, Bombay Bullion Association said that 10 tonnes of gold had already been imported to India.

This year, the Akshaya Tritiya is very special to the traders for many reasons. Like many other industries, the Indian gold industries also fell pray to the economic recession. In the first three months, sales of gold went down due to higher price and gold import also decreased. The festival has brought hope among businessman and potential buyers. Gold traders are looking forward to do a good business and they are doing whatever they can to attract people. On the other hand, the price of gold fell 9% from a record high Rs. 15,780 per 10 gm in February to Rs. 14,300. In that same month, Multi Commodity Exchange rose to a record high of Rs. 16,040 per 10 grams as economic meltdown boosted buying.

Ajay Mitra, Managing director, WGC, said that Indian jewelers would invest around Rs. 40 million in advertisements. In addition, they are going to give out many “get one free” offers. Daman Prakash, director, MNC Bullion, admitted of the upsurge in gold demand in current times but it is still 50% lower compared to 2008. Large purchases took place after gold price declined but overall buying went downwards. Gold traders are expecting sales to be lower than 2008 but it will be 7.3% higher compared to 2007.