Hike in the Import Duty over Gold to 8 per cent doesn’t seem to be very blissful for the Indian Gems and Jewellery Industry. The hike in the rate was announced when the Reserve Bank of India (RBI) had forced domestic jewellers to buy only on cash basis and expected to slash Imports, which had hit 162 tonnes in May, twice the monthly average of 2011 when they reached a record.

Consequence of this is not pleasing. Growth rate is found to be diminished for the sector. After the notification by RBI, high pressure is examined over the Jewellery stocks for many big players in the Industry.

Tribhovandas Bhimji Zaveri has dipped almost 21 per cent in two days to Rs 194, followed by Shree Ganesh Jewellery House (down 13 per cent to Rs 81.55), PC Jeweller (down 12 per cent to Rs 101) and Gitanjali Gems (down five per cent to Rs 530).

Titan Industries, is trading at its lowest level since February 2012, has sink 23 per cent. The company said RBI had clarified all import of gold for domestic consumption, either through banks, nominated agencies or directly, could be made only with 100 per cent cash margin. These notifications would change Titan's financial model, as its gold on lease model would cease and it would have to entirely self-fund its gold requirements, analysts say.

Jewellery Sector in the largest loser, slipping 13.3 per cent two days as compared to 2.1 per cent in the benchmark S&P BSE Sensex, as reported by The BSE consumer durables index, the jewellery sector has a combined weightage of about 70 per cent.

"In June-July we will see a sharp drop in imports. In April and May we imported around 300 tonnes. In June and July imports would be around 90 tonnes," said Prithviraj Kothari, director with RiddiSiddhi Bullions Ltd, a wholesaler in Mumbai.

A K Prabhakar, senior vice-president, equity research, at Anand Rathi says, “There are fears that the government would act more to reduce gold import. In such a scenario, it would be wise to wait and buy Titan at lower levels. However, I would avoid the other stocks from this space."

Jagannadham Thunuguntla, head of research at SMC Global Securities, suggests that the good times for jewellery stocks are over.