Jewellery stocks rallied 2-20 percent on Monday after the Government withdrew its GST notification on gems and jewellery.
Gitanjali Gems, PC Jeweller, Titan Company, Tara Jewels and TBZ gained 4-7 percent as Permanent Account Number (PAN) card and Aadhaar card will no longer be mandatory on the purchase of jewellery for over Rs 50,000.
This raised hopes for likely increase in demand for jewellery in Diwali festival (especially Dhanteras day).
Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables and is largely celebrated in North and West India.
The government has taken this decision at its 22nd GST Council meeting on Friday.
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During last Dhanteras, gold and jewellery sales had risen by up to 25 percent on higher demand in view of good monsoon and favourable price levels, as per the industry body data.
CLSA said the government deferring PMLA for the sector came at the right time, given the ensuing festive season.
Titan remained its preferred pick. It has a buy call on the stock with a target price of Rs 700 per share.
In a notification issued on August 23, the government had brought jewellery dealers under the purview of the Prevention of Money Laundering Act 2002 (PMLA) and were told to report on buyers making purchases over Rs 50,000. Therefore, PAN and Aadhaar cards were made mandatory as part of 'Know your customer (KYC)' rule.
India is the world's largest gold consumer and imports a sizeable chunk of its total annual consumption of around 900-1,000 tonne.
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