Gems and jewelry stocks dropped on Thursday, July 31, after the US imposed 25% on India. Expectations of short-term disruption have emerged in the sector, pushing investors to offload shares on BSE and NSE. Titan Company, Kalyan Jewellers, Sky Gold, PN Gadgil Jewellers and others traded on a bearish note.

Gems & Jewellery Stocks:

At the time of writing, Kalyan Jewellers shares dropped by 2.4%, while Vaibhav Global plunged 2.2% and Rajesh Exports tumbled by 2.25%. Goldiam International dipped by nearly 4%.

Meanwhile, stocks like Sky Gold, Thangamayil Jewellery, PN Gadgil Jewellers, and Rajesh Exports dipped by 1% to 2%.

How will the Gems and Jewellery Sector Will Be Impacted?

"Gems & Jewellery - accounts for 12% of exports to USA ($9.9bn of $33bn in FY24). It includes cut and polished diamonds and lab-grown diamonds ($0.8bn, 92% share). The new 25%+ tariff significantly increases export costs. The sector remains vital to employment and could see some impact on exports," said Amnish Aggarwal, Director - Research, Institutional Research, at PL Capital.

On the overall 25% impact, Jyoti Prakash, Managing Partner. Equity and PMS at AlphaaMoney said, "Obviously, a ten-fold rise in tariffs will be a drag on growth, to the extent of 20-30bps. But it would be a mistake to extrapolate the announced tariffs to eternity. We expect a trade deal in the next 6 months, leading to reductions in rate of tariffs, maybe in the region of 15%. Meanwhile, do expect a small cut to EPS estimates of major indices as the correlation of GDP growth and corporate profitability is highest for India vs. peers."

Trump's Tariff Jibe At India:

Through his Truth Social account, US President Donald Trump said, "I don't care what India does with Russia. They can take their dead economies down together, for all I care. We have done very little business with India; their Tariffs are too high, among the highest in the World. Likewise, Russia and the USA do almost no business together. Let's keep it that way, and tell Medvedev, the failed former President of Russia, who thinks he's still President, to watch his words. He's entering very dangerous territory!."

Trump added, "Remember, while India is our friend, we have, over the years, done relatively little business with them because their Tariffs are far too high, among the highest in the World, and they have the most strenuous and obnoxious non-monetary Trade Barriers of any Country. Also, they have always bought a vast majority of their military equipment from Russia, and are Russia's largest buyer of ENERGY, along with China, at a time when everyone wants Russia to STOP THE KILLING IN UKRAINE - ALL THINGS NOT GOOD! INDIA WILL THEREFORE BE PAYING A TARIFF OF 25%, PLUS A PENALTY FOR THE ABOVE, STARTING ON AUGUST FIRST."

Hence, US has imposed 25% tariff on India, which will impact a slew of sectors including gems and jewellery.