With jewellery shops in Mumbai reopening on Friday after nearly 70 days of lockdown, retailers hope for a revival in sentiment. Initial business will be redemption of old ornaments for cash, but jewellers also expect many customers to buy fresh jewellery in return as there is pent up demand in the system for marriages that had been postponed earlier.

Mumbai jewellers will start odd-even formula, that is, shops on either side of the street opening on alternative days. Initially, more customers are likely to visit the outlets to sell jewellery/gold to raise money. “Now, consumers would visit stores to sell their old ornaments for cash. While farmers would use the cash to buy seeds and fertilisers for kharif sowing, urban consumers would use cash for credit card payments, school fees etc. The market will see some selling pressure,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar.

But eventually demand is expected to be good. Jewellers are trying to spur new demand by using their monthly schemes where immediate liquidity for whole purchase in not needed.

Jewellery stores in the green belts across the country like North Indian states, Bengaluru, parts of Pune and West Bebgal, and north eastern states have already announced reopening weeks ago. With jewellery stores in Mumbai raise their shutters, rollover of gold and jewellery in the country will increase and hence, business across the value chain would gather momentum gradually.

Owing to the nationwide lockdown, buying jewellery for weddings, Chaitra Navratri and Eid was muted. Some players tried selling jewellery online too, but the offtake was negligible.

“We can see redemptions held up due to the nationwide lockdown making a comeback. Along with old gold exchange, consumers normally buy ornaments with additional grammage of new gold. So, we estimate demand for new gold despite a lean buying season,” said Rajiv Popley, Director, Popley & Sons, a Mumbai-based retailer.

Wedding demand is expected to be of low caratage -- smaller gramage but with heavy jewellery.

“There will be no downside in jewellery buying at this level. There will be recovery going forward even during the current lean season as supply from the key Mumbai market will start the ball rolling across all jewellery value chain,” said Surendra Mehta, National Secretary, India Bullion and Jewellers Association (IBJA).

Meanwhile, jewellers are facing margin calls on gold metal loan due to appreciation in gold prices during this lockdown period. Standard gold prices have risen to trade at Rs 46,225 per 10g on Thursday from its level of Rs 42,078 per 10g immediately before the lockdown began on March 25.

“Jewellers would clear old stock and go slow on new manufacturing due to expectations of weak sales during the monsoon season. Also, skilled karigars have already migrated back to their native place which would impact manufacturing of jewellery. We are trying our best to bring them back to their original back for preparations of Dussehra and Diwali seasons,” said Padmanabhan.

Jewellers have paid Rs 4500 as one time help to skilled karigars and arranged with travelling to their native place. Jewellers are planning to offer higher salary and incentives to bring karigars back to jewellery making.