JEWELLERY DEMAND TO GROW

Jewellery demand in the country is expected to rise to 670-685 tonnes, despite volatility in gold prices, India Ratings and Research (Ind-Ra) has said. Maintaining stable outlook on jewellers, Ind-Ra said it "...expects retailers to fare well underpinned by a sustainable domestic demand, shifting preference towards branded jewellery and fading regulatory headwinds." However, it added the excise duty hike announced in the Union Budget may have a marginal impact on the demand in the near-term. Ind-Ra also said that it "Expects domestic jewellery demand to remain robust and grow at 3-5 per cent in 2016 to 670-685 tonnes because such demand remained steady at 600-670 tonnes over 2010-2015... despite gold price volatility on the back of wedding related purchases." It further said an improvement in demand for coins and bars as consumers seek gold's wealth protection properties in the backdrop of a high economic and political uncertainty globally, turmoil in equity markets and weakening in domestic currency. For exporters, the agency revised the outlook to negative from stable due to slowing Chinese demand for diamond jewellery. "Cut Polished Diamond exports to remain under pressure as steady growth in diamond jewellery consumption in the US market will be offset by weaker sales in China and Hong Kong," it added. Rough diamond prices to decline by another 5-10 per cent in 2016 as key producers lower prices and guide down production to restore the demand supply balance and support the midstream.

Gold ETFs see Rs 800 cr outflow

Investors continued to remain bearish on gold exchange-traded funds (ETFs) as they pulled out around Rs 800 crore from the instrument during the first 11 months of the current fiscal. As things stand now, FY16 will mark the third consecutive financial year of outflow from gold ETFs. The pace of outflow, however, slowed down in 2015-16 as against the preceding two years on account of sluggish equity market, experts said. Gold ETFs witnessed a net outflow of Rs 798 crore in the first 11 months (April-February) of the ongoing fiscal compared to an outflow of Rs 1,364 crore during the same period of 2014-15 fiscal. These funds witnessed outflow of Rs 1,475 crore in entire 2014-15 and a withdrawal of Rs 2,293 crore in 2013-14. However, the asset base of gold funds marginally increased to Rs 6,672 crore in February 2016 from Rs 6,665 crore at the end of March 2015. The mutual fund sector has 14 gold-based schemes, which have been in the market since 2006-07. The demand for gold ETFs has been steadily falling in the past few years. These products have seen outflow as gold prices are correcting and equities have given good returns to investors. Retail investors have been putting in more money into equity and debt mutual funds during April-February. Equity and equity-linked saving schemes saw an infusion of Rs 75,394 crore and debt funds attracted about Rs 20,000 crore. Overall, mutual fund schemes have witnessed an inflow of Rs 2.07 lakh crore during the period under review.