Gitanjali Gems retails branded gold and diamond jewellery and exports cut and polished diamonds.

When it was trading at Rs 310 we informed it as a good trading stock. The stock price has moved up by more than 45% since then. Though we have given an exit some of the members have reentered it when it came down to Rs 310! It is time to evaluate it as the stock price is moving up despite poor market conditions.

The results of the company are not encouraging. Gitanjali Gems net profit declines 8.17% to Rs 78.33 crore in the September 2012 as against Rs 85.30 crore during the previous quarter ended September 2011.  Interestingly, the sales rose 15.53% to Rs 2241.60 crore in the quarter ended September 2012 as against Rs 1940.25 crore during the previous quarter ended September 2011. The company’s high interest cost is hurting the bottom line which is why the net profit is down. Besides, higher gold price in rupee terms is hurting the profitability as well as the growth of the company. Though global gold price has cooled off, the price in rupee terms is up more than 10 per cent over the last year. Recently the board has given in-principle approval to merge Gitanjali Infratech, a 100% subsidiary of the company, into Gitanjali Gems. Probably that has driven the stock price to higher level. At current price the stock does not have any strength to move up. However technically one has to watch if the stock crosses Rs 455 and finally Rs 480. In case it does then it could touch Rs 600 in short span of time. However right now the stock does not offer margin of safety and one has to be careful with such kind of stocks where punters are active. To get into safe set of stocks please sign in for retire rich stocks. The last date for signing up is closing on 30^th November, 2012, after which you have to wait for 1 year to sign up. If you need more details please write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it now.

Market update:

The market may go in either way now. Charts indicate that the correction is over but we will have to check if bears resurface again at higher levels. The market should close above 5600 levels today otherwise the market may sink to 5400! Let us check it and inform you in the coming days.