Shares of major jewellery companies took a sharp beating on Monday after prime minister (PM) Narendra Modi, addressing a public gathering at the Parade Grounds in Hyderabad on Sunday, called on Indians to refrain from purchasing gold for at least one year. The appeal, framed as a national economic necessity amid the ongoing US-Iran war and a spiralling crude oil import bill, sent shockwaves through the sector — with stocks shedding between 6% and 11% in early trade.
Titan Company emerged as the top Nifty loser in the morning trade, tumbling 7.96% to ₹4,150.10 on the NSE — a striking reversal given that the stock had touched its all-time high just last Friday after its March quarter results. Senco Gold was the hardest hit among the pack, crashing 10.79% to ₹325.65. Kalyan Jewellers India fell over 9.98% to ₹382.10, while PN Gadgil Jewellers slipped 9.06% to ₹662.10.
The broader market too remained under pressure, with the Sensex shedding 1,076 points or 1.42% to 76,239 and the NIFTY declining 318 points or 1.32% to 23,856 in morning trade. The Nifty Consumer Durables index, which houses several of these counters, was the worst-performing sectoral index with a decline of over 3%. On MCX, gold futures also eased, slipping 0.32% to ₹152,102 per 10gm by 10:45am.
PM Modi's remarks were a direct response to the mounting pressure on India's foreign exchange reserves. Global crude oil prices have surged dramatically — from approximately US$70/barrel to nearly US$12/barrel in recent weeks — following escalating conflict in West Asia and disruptions around the Strait of Hormuz, one of the world's most critical oil shipping routes. The situation worsened further after US president Donald Trump rejected Iran's latest peace proposals which had included a partial transfer of its enriched uranium stockpile without a commitment to dismantle its nuclear facilities — a non-starter for Washington. Crude prices accordingly pushed back above US$105/barrel, intensifying global inflation fears.
For India, the stakes are particularly high. The country imports more than 88% of its crude oil requirements, meaning every dollar jump in oil prices translates directly into a heavier import bill. Simultaneously, the rupee has weakened sharply against the US dollar in recent weeks, touching record lows, making oil and gold imports even costlier in domestic currency terms. With the government's oil marketing companies already absorbing significant losses to prevent a retail fuel price hike, officials have warned that the situation cannot be sustained indefinitely.
This is where gold comes into play. India is one of the largest gold importers in the world and demand typically rises during wedding seasons and periods of economic uncertainty as households treat it as a safe-haven asset. Since gold, like crude, is priced in US dollars, large-scale imports widen the current account deficit—the gap between what the country earns and what it spends in foreign currency. That outflow puts additional downward pressure on the rupee which, in turn, makes all imports more expensive, creating a self-reinforcing cycle of currency weakness and inflation.
PM Modi made the economic logic plain in his address. "Gold purchases are another area where foreign exchange is used extensively. In the national interest, we must resolve not to purchase gold for a year," he said. The appeal was part of a broader austerity call that also included postponing non-essential foreign travel and destination weddings abroad, reviving work-from-home and video conferencing habits developed during the COVID-19 pandemic, shifting to carpooling, metro rail, and electric vehicles and reducing consumption of imported edible oil and chemical fertilisers.
India has navigated similar pressures before. In past episodes of currency stress, governments have raised import duties on gold, restricted inbound shipments, and promoted alternatives such as sovereign gold bonds — all aimed at cooling dollar outflows without curtailing domestic savings entirely. The PM's appeal this time is a softer, citizen-led variant of the same philosophy: manage aggregate demand through collective behaviour rather than regulatory fiat.
The political reaction was swift as well. Congress leader KC Venugopal accused the Centre of shifting the burden of the energy crisis onto ordinary citizens, arguing that three months into the US-Iran conflict, the government had still not secured India's energy supply chains. Union home minister Amit Shah, however, backed the prime minister's call, describing it as a 'visionary roadmap' to steer India toward energy security and self-reliance.
The gold market itself faces a more complex dynamic. Geopolitical tensions would ordinarily push bullion sharply higher as investors seek safe havens, but the simultaneous surge in crude oil is stoking fears of prolonged global inflation and higher interest rates — a negative for gold which offers no yield. In effect, gold is caught between two opposing forces: war-driven safe-haven demand on one side and rate-expectations-driven selling on the other.
For India's jewellery sector, the near-term outlook has turned decidedly cloudy. Whether PM Modi's appeal will meaningfully dent consumer demand remains to be seen — economists are quick to note that no single household's decision moves the rupee. But the aggregate impact of millions of households delaying purchases, layered on top of already-elevated global prices and a weakening currency, could prove a material headwind for companies that have ridden years of strong gold demand to all-time highs.
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