Jewellery stocks fell sharply on Monday after Prime Minister Narendra Modi publicly urged Indians to avoid buying gold and instead invest in domestic financial assets. Titan dropped as much as 12%, with Kalyan Jewellers, Sky Gold, and Senco Gold also sliding heavily as markets opened.

The sell-off is a direct reaction to PM Modi's appeal, which came amid a broader government effort to reduce India's dependence on gold imports. India is one of the world's largest consumers of gold, and import bills for the metal are a persistent drag on the current account deficit, the gap between what the country earns and spends in foreign exchange.

Why Gold Demand Matters So Much for These Companies

Titan, Kalyan Jewellers, Senco, and Sky Gold derive the bulk of their revenue from retail jewellery sales, which are closely tied to consumer sentiment around gold. Any sustained dip in gold buying, whether driven by government messaging, rising prices, or both, directly squeezes the volume of jewellery sold and, in turn, these companies' revenue and margins.

The scale of the drop signals that investors are pricing in a real risk: if a Prime Ministerial appeal shifts even a slice of consumer behaviour, the demand momentum that has driven strong earnings in the sector over recent years could slow. Gold purchases in India are also seasonal and discretionary, making them more vulnerable to sentiment shifts than everyday goods.

What the Market Is Really Worried About

The concern isn't just about one speech. Investors are reading it as a possible signal of more sustained policy pressure on gold demand, whether through continued public messaging, or potentially through fiscal measures that make financial instruments more attractive relative to physical gold. That forward-looking uncertainty is what tends to trigger outsized single-day moves in sector stocks.

Sky Gold and Senco, which are smaller and less diversified than Titan, are more exposed to a pure-play jewellery demand slowdown, which may explain why their falls tracked or exceeded Titan's percentage drop.

For now, the key question is whether PM Modi's appeal translates into measurable changes in consumer buying behaviour, especially ahead of the festive and wedding season, which is typically the strongest period for jewellery sales. If demand data from the next quarter shows no material impact, these stocks could recover quickly. But if retailers start reporting softer footfall or lower ticket sizes, the current correction may have further to run.