Gems and jewellery are not good for long term investment: P Phani Sekhar, Angel Broking

In a chat with ET Now, P Phani Sekhar, Fund Manager-PMS, Angel Broking, shares his views on the gems and jewellery space.

ET Now: What is your call on gems and jewellery sector?

P Phani Sekhar: This sector has been performing for the last one year. I do not like the basic fundamentals of this sector to invest for the longer term especially at these valuations. This is because we have companies which have operated with very limited stores for a very long time and now they are trying to expand. A lot of public and private equity money has flown through these sectors.

This means that all the major players in this sector and many IPOs will be trying to battle for market share. This is not a good scenario as far as investors are concerned. This might be good for consumers but as far as investors are concerned, they need a stable industry with high entry barriers. With money getting cheap and trying to continuously flow into this sector, we will see return of capital. Over the next 2-3 years, we will see a great disappointment for investors.