Crude &

Crude Price & Political Development Will Be Key Factor for the Market
Trend……


-->Domestic bourses are likely to track movement in global equities for direction. Volatility is also likely to continue in coming week. In the near term focus may shift to earnings season as IT bellwether Infosys Technologies kickstarts June 2008 quarter earnings season on Friday, 11 July 2008.
-->However tough macro economic environment comprising high inflation, record high global crude oil prices and rising interest rates will continue to weigh on the sentiment in near term.
-->India's wholesale price index rose 11.63% for week ended 21 June 2008, a 13-yeat high. Experts opine that the double-digit inflation is here to stay for some more time, but could trend down from September 2008.
-->On the positive side, India's monsoon has been 21% above average so far this season. A normal monsoon may lift farm production, which accounts for a fifth of the economy, and cool the nation's fastest inflation rate in 13 years.
-->The market will also keep a close watch on developments on the political front. Communist parties on Friday, 4 July 2008, said the government must tell them by Monday, 7 July 2008, if it plans to press ahead with the next step in a controversial civilian nuclear deal with the United States. Left parties have threatened to end their backing for the government if it seeks approval for the deal from the International Atomic Energy Agency (IAEA), the next international move needed to operationalise the pact.

--> From a record high of 21,206.77 hit on 10 January 2008, Sensex has lost 7752.77 points or 36.55%. It has shed 6832.99 points or 33.68% in calendar year 2008 thus far from its close of 20286.99 on 31 December 2007.




Gems and Jewellery Sector is Shinning !!!
The Gems and Jewellery sector is a leading foreign exchange earner, as well as one of the
fastest growing industries in the India. While a predominant portion of gold jewellery
manufactured in India is for domestic consumption, a predominant portion of rough, uncut
diamonds processed in the form of either polished diamonds or finished diamond jewellery is
exported. Worldwide, the gems and jewellery industry has been growing at a good pace and
is currently estimated at over US$ 130 billion. With an estimated consumption of 800 tonnes
India is the largest consumer of gold in the world. India is also estimated to hold nearly
15,000 tonnes of gold, accounting for nearly 10% of the world's cumulative mine
production. India is the world’s largest diamond processing (cutting and polishing) country
with an 80 % share in world market. The gems and jewellery sector accounts for nearly 20%
of total Indian exports.




Indian Market



The Indian jewellery market is the second largest in the world; with a market size of Rs. 52000 crores behind US. The gold jewellery market is growing at 15% per annum and the diamond ewellery market at 27% per annum. The emergence of branded jewellery is a new trend that is shaping the Indian jewellery market. India’s economic boom in the country with increasing urchasing power and higher disposable income has translated into a large consumer market for jewellery and other luxury products, offering a lucrative opportunity for major brands to make their foray into the Indian market and establish their presence.

We believe that by 2013, India will become the biggest consumer of jewellery. The big players like Gitanjali Gems, Tanishq and Adora are expecting sales growth of about 20-50%. Though Inflationary pressure is building up but companies are in mood to expand and coming up with new retail outlets to increase market share.




Exports
India has made its mark in the global arena in the diamond processing industry progressively
becoming the leading global gems and jewellery hub. The industry has shown steady progress
recording a 22.27 % growth, amounting to total exports of US$ 21 bn in 2007-08 as against US$ 17 bn in 2006-07. The diamond trade generates over US$ 4 bn per annum in exports. India has continued to maintain its tradition of diamond cutting with an estimated 1 million processors handling over 57% of the world’s rough diamonds by value.

India’s exports of gold jewellery have increased in recent years. The share of gold jewellery in India’s exports of Gems and Jewellery rose from 9% in 1994 to 26% in 2007. It is due to healthy growth in demand in key markets and intensive efforts by exporters towards improved quality and new designs.



Advantage India
Jewellery has been an integral part of the Indian culture and civilization since ancient history.
Indian gems and jewellery industry is competitive in the world market due to its low cost of production and the availability of skilled labour. In addition, the industry has set up a worldwide distribution network, of more than 3,000 offices for the promotion and marketing of Indian diamonds.

The industry has made rapid pace in design, powered by a new generation of young, professionally trained, technology driven designers.


Government Support

The Gems and Jewellery industry is highly sensitive to Government's policies. TheIndian government also provided momentum to the booming gems and jewellery industry

with favorable foreign trade policies for this sector. The government abolished import duty on import of rough diamonds. The import tariff on cut & polished diamonds, and gemstones was also reduced from 15% to 5%.The GoI also reduced the customs duty on gold to Rs. 100 per 10 grams, which did not apply to tola bars.
The government also allowed duty-free import of rough colored precious gemstones. Thus, it may now be viable for jewellery makers to import expensive, large-size diamonds and export them in the form of ornaments. Some areas of Mumbai have been given Special Economic Zone (SEZ) status or Gems and Jewellery industries.
The income tax exemption available to 100% EOU has now been extended to 31st March, 2010.




Future Outlook
The booming economy along with the rapid increase in income levels is estimated to further accelerate the growth of this industry. The growth is also likely to be driven by increased exports to the US and other markets, apart from a surge in domestic consumption. The insatiable Indian passion for gems and jewellery and increasing disposable incomes will see demand skyrocketing to $21 billion by 2010 and $37 billion in 2015. Diamond jewellery consumption in India is also estimated to jump by 78 per cent in 2010. The gems and jewellery export will be doubled in the next seven years.
We expect Companies like Gitanjali Gems which is aggressive in branded jewellery segment as well as in export business can give good returns in a long term. Tanishq (Titan Industries) is also increasing its space with opening more stores across the country. It is also doing extensive marketing & brand building efforts to capture the market in emerging branded jewellery segment. Investor can buy the stock of Titan Industries and Gitanjali Gems for good return in next 12 to 18 months.