Market Outlook Bright

RAPAPORT... Diamond jewelry in India is fast replacing traditional yellow gold jewelry. Not only are diamonds considered trendy but the knowledge that the stone also has an investment value is being gradually accepted. Some jewelry designers are specializing exclusively in diamond jewelry. 

Shaping Up for the Year Ahead

Anaggh Desai, chief executive officer (CEO), Damas India, commented that, “Compared to 2006, we see 30 percent growth so far this year. The diamond industry is upbeat and expected to grow compounded annually at 20 percent.” Vijay Jain, CEO, Orra, agreed, “New Year’s is a very important season for jewelry shopping. Sales see a rise with a lot of non-resident Indians (NRIs) returning to India during this season. People tend to prefer contemporary designs, although there is also a huge demand for traditional jewelry. Platinum combined with diamonds is also extremely popular. Customers are also buying jewelry with colored stones, pearls and rose cuts in combination with diamonds. Floral and classic eternal patterns are also widely accepted.”

According to Mehul Choksi, who has a huge portfolio under his Gitanjali Group umbrella, “From October, when the festive period in India begins, diamond and jewelry sales start booming. The wedding period is still lingering now and sales will continue to be in full swing until March this year. Even though the revenues might not be that exciting, overall demand for diamond jewelry is increasing and consumer behavior is showing a significant shift in favor of diamonds, so we expect this year to bring us greater prosperity than ever.”

Shapes and Cuts in Demand

In terms of cuts, Choksi said, “For the domestic market, the round brilliant cut has always been one of the fastest-moving goods. Other shapes like baguettes and marquises also enjoy significant demand. However, the round brilliant cuts still reign in the industry. When set in floral designs or as a cluster, these diamonds create very pretty motifs that gel beautifully with the Indian attire, fit in with Indian characteristics and complement our sense of adornment.”

“Diamonds have always been popular with all age groups and for all occasions,” said Jain. “However, diamonds and color stones fall in distinct segments. While diamonds have become a ‘must-have’ category, color stones are largely bordering on accessories. In the past couple of years, precious color stones like rubies and emeralds in combination with diamonds have become extremely popular.”

Yellow Versus White Metal

Yellow metal traditionally has captured women’s fancy with its look and sheen, but its counterpart — platinum — currently is attracting more attention. Platinum with diamonds is what the younger generation opts for, according to Jain. “We have been seeing a tremendous response for our platinum collection of rings and bands for the past couple of seasons. We believe platinum is gradually gaining acceptance and increasingly becoming a natural choice for engagement rings and wedding bands. In fact, it is also becoming popular in social and religious contexts, such as the Akshaya Tritiya festival. In 2006, astrologers suggested platinum as a lucky metal to buy during Akshaya Tritiya, so the platinum pieces of our Spiritual Collection did very well in the south of India, which is otherwise known for its gold consumption.”

Desai is equally enthusiastic about platinum. “The demand for platinum has skyrocketed and it is getting more and more popular, due to its rarity and versatile features,” he said.

Government Contribution

The Indian government is showing a keen interest in the gems and jewelry sector and is committed to seeing it progress. The Commerce Ministry has provided extensive assistance to establish the Indian Institute of Gems and Jewellery (IIGJ) in Mumbai and the Sardar Vallabhai Institute for Jewelry Design and Manufacture in Surat.

Choksi agreed that the government “is supporting the growth of the industry. The jewelry business in India is still primarily controlled by the unorganized zaveri class, so to attain the status of an industry in itself has been quite encouraging. There are SEZs [special economic zones] opening up in Hyderabad with the support of the state government and several other initiatives are being taken by the associations of traders themselves. A lot more of such organized and combined efforts would give us better results in the times to come.”

The Marketplace

• Activity was strong in -2 goods — 0.01 carats — in the $200+ range.
• Stable activity is reported for stars. Main demand is for $250 goods for 11-12+/I+ and demand is strong for VS+/H+.
• Melee is doing better than stars. Goods are in demand in $300+ range I1+/I+, especially for 0.04 carats+. Brown goods are also in demand for melee size in $100 to $150 price range.
• Demand is good for 0.08 to 0.18 carats I1+/I+. Shortages exist for VS+ goods, whites. Straight 10-pointers are very hot with extreme shortages.
• 1/5, 1/4 and 1/3 are slow overall. VVS is doing better in local activity.
• 0.50 carats are moving well except for SI category. Prices dropped post-Diwali, and goods are 3 to 5 percent cheaper. More goods are seen in the market.
• 0.80 to 0.99 carats are hot. Not much choice available, but prices are stable.
• 1 carats are doing better in 2007 compared to December. Demand has picked up for lower J-L colors as well. Shortages exist for premium sizes.
• Demand, prices and availability are all stable for 2 carats.
• Good demand for 3 carats and more goods are seen. Matched pairs are extremely hard to find, starting from 2.50 carats+, especially collection goods.
• Shortages exist for 4 and 5 carats.

Article from the Rapaport Magazine - February 2007. To subscribe click here.