Bengaluru Real Estate and Jewellery Shares Decline for Second Consecutive Day Amid PM's Austerity Measures

Indian Stocks Plunge Amidst PM Modi's Fuel Crisis Warning

Bengaluru-based real estate stocks and jewellery stocks continued to experience selling pressure for the second consecutive day on May 12, following a call by Prime Minister Narendra Modi to curb gold purchases for the next one year and adopt work-from-home arrangements to mitigate the fuel crisis caused by the ongoing conflict in West Asia.

This move has led to a decline in stocks such as Brigade Enterprises, Prestige Estates, and Puravanakara, which fell by up to 3%. Similarly, jewellery stocks like Titan, Kalyan Jewellers, and Senco Gold declined by up to 5%.

JM Financial, a domestic brokerage, notes that the Prime Minister's speech should be considered a precursor to potential fiscal and monetary measures that may be announced in the coming weeks if the conflict continues. These measures would aim to cushion the Indian rupee (INR) from further depreciation.

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According to JM Financial, the government is likely to adopt a gradual approach, which may include increasing fuel prices in stages, temporarily reducing the Liberalised Remittance Scheme (LRS) limits, and hiking duty on gold imports as the lean wedding season approaches.

The brokerage highlights the significance of oil imports, which account for 20% of India's total imports, followed by gold imports at 9%, and fertilisers at 2%. Additionally, remittances under the LRS have seen a notable increase, with international travel remittances constituting around 58% ($30 billion in FY25) and equity investment remittances more than doubling from 3.1% in FY19 to 8.4% in the current fiscal year.

JM Financial warns that a prolonged conflict in West Asia could moderate GDP growth to 6-6.5% and lead to a deterioration in the current account deficit (CAD) to 1.9% of GDP, as inward remittances will also be at risk. The brokerage recommends that the government focus on increasing strategic petroleum reserves as part of its austerity measures.

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