India's festival season has triggered a jump in gold sales, but imports for the year are still likely to halve from 2008, a top official at HDFC Bank (HDBK.BO: Quote) said on Monday. September had seen a sudden rise in demand mainly on account of the Dhanteras and Diwali festivals that fall this week, but that was unlikely to make up for poor sales earlier in the year, said Ashima Bhat, the executive in charge of HDFC Bank's gold imports.
"The pick-up is happening now. But how much could it pick up? The year will still close with significantly lower imports than last year," she said in an interview.
"Also it helps that the stock market has been better. You find people getting a little adventurous and buying gold," Bhat said.
India is the world's largest consumer of gold, importing between 400-800 tonnes of gold a year according to various trade body estimates. But this year, high prices and the global economic meltdown have taken a toll on demand.
Bhat said total imports at the end of 2009 could be half that of last year. World Gold Council's (WGC) data shows India imported 712.6 tonnes of gold in 2008.
HDFC is one of the 23 banks licensed to import gold and sell to traders and jewellers. Trade sources put it neck-and-neck with ICICI Bank (ICBK.BO: Quote) for top position in the retail bullion segment, and one of the top 10 in the wholesale segment.
Bhat, who is also country head of HDFC's emerging corporates and infrastructure finance groups, said more consumers were seeking larger denomination coins and bars for investment.
"We find a lot of people will, rather than 5 gram, opt for the 20 gram or 50 gram bars... they are very interested in buying the 1 kg bars," Bhat said.
The retail segment, which made up about 30% of the industry's sales, was growing faster than the wholesale segment, she said.
"Gold as an investment avenue was unknown and untouched till about 4-5 years back. As an investment option, by and large you would buy jewellery but you would not buy bars. Now an awareness about it as an investment option has caught on," she said.
In 2008, India imported 501.6 tonnes of gold for jewellery making and 211 for investment, the WGC data showed.
Bhat said price would be a key influence on sales next year.
"If gold stays above $1,000 I think demand is going to stay exactly as this year. There will be no growth," she said.
"People will buy less gold, it's not that they will not buy gold at all."
($1=46.7 rupees) (Editing by John Mair)
