Gold Crackers

• Indian investors have shed their price sensitiveness and are buying gold, which is expected to scale $850 per ounce from current $820 level
  
• India could see highest gold import of 800-900 tonnes to meet demand
  
• Huge gains from stockmarket and real estate boom is seeing greater liquidity and investments in gold
  
• Stockmarkets too seem to have no dearth of investors as experts see no diversion of funds for gold purchase
  
• Festive spirit seems lacking in the automobile sector despite incentives to woo buyers, many of whom have put off purchase due to high interest rates
  
• Consumer durable companies are banking on festive buying to make up for low sales in previous months
  
• Festive gift buying riding on good Q2 corporate results

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Of course, the festive season provides its traditional push to gold sales. Says Kanwar Vivek, GM, Retail Liabilities Group, ICICI Bank Ltd, it is difficult to quantify the demand for gold during Diwali as 25-30 per cent of purchase is for gifting and for marking an auspicious occasion. "With prices ruling high, people are thinking twice before buying gold. Yet, there has been around 30-40 per cent increase in volumes over last year, when we had around 100 per cent growth over the previous year," he says.

High prices may have led to small buyers putting off casual buys, but there seems to be no dearth of demand from those planning weddings or with surplus cash. "The increase in gold and silver prices has had some impact, but now customers are returning in the expectations of a further rise in prices and thus better returns on investment," says A.R. Goyal, marketing director of state-owned MMTC, a major bullion channelising agency, which clocked Rs 23 crore sales at its eight-day gold festival recently.

Banks too are witnessing big corporate demand for gold guineas as gift articles this year. The gifting season normally extends from October till year-end. Cashing in on this, many consumer durable and electronic companies have come out with schemes and gifts to woo consumers and make up for the rather lean season that preceded the current consumer boom.

Says a spokesperson from Korean consumer electronics giant Samsung: "We are looking at a 41 per cent growth during the festival season alone with a sales target of about Rs 1,200 crore against last year's Rs 850 crore." Targeting $1.3 billion sales for the full year, Samsung is eyeing sales of 5.5 lakh TV sets during the festive season from October 12 to November 10. Of this, 50,000 are LCD TVs. In October itself, the company sold around 35,000 lcds. In the home appliances segment too, the company expects to clock a 30 per cent growth during this season.

With the increase in disposable income in urban centres, the malls and shopping complexes are abuzz with buying activity. For instance, last Sunday before Diwali, electronic superstore Reliance Digital had estimated 4,000 footfalls with Rs 15 lakh worth sales by late afternoon, according to market sources.

What was pushing the companies' fortune was a large amount of impulsive buying by consumers ahead of Diwali. Said a 55-year-old professor at a Noida mall: "I had come to hunt for a good refrigerator to replace my old one this Diwali, but am going back with a microwave oven because there are a lot of free gifts bundled with it just for today." Another Delhi family on a day out to buy gifts for relatives ended up purchasing Rs 10,000 worth of goods for their household.

Auto marketers, however, are facing tough times despite attractive discounts. With high interest rates proving a killjoy, Bajaj and TVS in the two-wheeler segment, and Honda Siel Cars and Skoda in the passenger-vehicles category, feel the festive season will end without a sparkle. Hyundai Motors, which has just launched the low-cost i10, is already seeing a dip in customers availing financing schemes from 85 to just 15 per cent, say industry sources.

Though Union finance minister P. Chidambaram has asked bankers to re-look at interest rates, which have risen by 3-3.5 percentage points since last December, auto companies are taking steps to cushion the impact on customers. So, alternative marketing and out-of-the-box thinking is the order of the day, with the country's largest carmaker Maruti Suzuki India (MSI) leading the way with offers like easy finance and getting their employees as well as their family and friends to buy a vehicle. These did pay off as Maruti clocked sales of 64,258 units in the domestic market in October. As an added incentive, Maruti is also offering a discount of Rs 10,000 on exchange of old cars.

Similarly, Toyota Kirloskar Motors has come up with the 'Touch Corolla, Feel Happy' campaign which allows buyers to switch a car every three years. "It is a unique low EMI buyback policy, with customers having the option of changing his old car for a new one at the end of three years. This campaign has enabled us to achieve September and October sales targets," inform company sources.

The silver lining, as Panandikar observes, is that people are increasingly becoming wiser as far as investments are concerned. Says he: "When incomes increase, the tendency towards savings increases much faster than consumption, because consumption needs are limited and need is felt to save for the future."

So, whether in gold, real estate or the stockmarket, investors have much to rejoice this festive season with its promise of rich dividends in the future.