diamond prices may be worrying diamantaires in Surat. But, high net worth individuals are seeing a sparkle in the crashing prices.
Anticipating some correction by Christmas, increasing number of HNIs are
looking at diamonds as an alternative to gold as a safe shelter for
their money, amid financial uncertainty and economic and currency
Polished diamond prices have fallen by 15%-20% in the last two months.
Most HNIs, according to the industry leaders, have started a rush
at the big retail houses to purchase loose diamonds, anticipating the
prices in the short-term - before Christmas season - might recover by
seven to eight per cent.
Mehul Choksi, chairman and managing
director (CMD), Gitanjali Group, said, "The big-sized diamonds above
four carats are the big bets these days and they are much sought after
investors. The diamond jewellery market in India is pegged at Rs 25,000
crore annually and it is growing by 25 per cent year-on-year."
Choksi added, "The loose diamond prices in the domestic markets in Surat
and Mumbai have crashed for the first time after the 2008 economic
crisis. Thus investors see this as an opportunity to park their money in
the precious stones. In the short or the long-term, the diamonds would
definitely fetch them a very high return."
Kaushik Mehta, a
diamond jewellery manufacturer in Mumbai said, "We are seeing lot of
interest in loose polished diamonds which are above three carat. Most of
our clients buy high-quality diamonds ranging from 3-10 carats, which
are very costly. Some prefer to stud the diamonds in jewellery, while
many keep it as investment. When the price would appreciate in the long
term, they would book the profit."
Mehta said a top quality
diamond weighing four carat with D colour is worth Rs 2.5 crore to Rs 3
crore. But the same diamond in the open market is now available for Rs
2.15 to Rs 2.80 crore. However, the investors have a huge price benefit.
India is the world's biggest polished diamond manufacturer, supplying
about 90 per cent of the polished diamonds by volume and about 80 per
cent by value. In 2011-12, India exported about $27 billion worth of
"The polished diamond demand in the country
is set to double by 2020 from the current $1.3 billion to $3 billion.
Though diamonds are studded in the jewellery, but they are also becoming
a commodity for investment. It is because there is no risk of price
volatility in diamond as compared to gold. The polished diamonds
continue to offer steady price appreciation of 5-6 per cent per annum,"
said Aniruddha Lidbide, a diamond analyst.