Stock Market fall has taken toll to Surat Diamond Market

With  raising of Rupees against Dollar, Surat Diamond and Surat Diamond Jewellry Market is already badly hit. And now its Stock market fall which has affected the industry badly.In a recent move a diamond trader oprating from the heera Bazaar in Mahidharpura area
went bankrupt some few days ago in the city because they could not pay back the debts. The defaulter, owing Rs 15 crore
to his creditors, had diverted a large sum of his money into the stock market to overcome problem of  crisis in diamond industry.
Another diamond trader-cum-manufacturer from Varachha diamond market went bankrupt
for Rs 15 crore, a fortnight ago. He is said to have lost a large sum of money
in the stock market and was unable to repay his creditors.
The meltdown in the stock market of January 22 and subsequent days has started
showing its impact on the diamond industry. The last fortnight has seen more than
a dozen diamond trader and manufacturers losing their investments in the stock
market and going bankrupt for Rs 90 to Rs 100 crore.
Experts in the industry said the stock market has done indelible damege to the
glittering trade of diamonds many more such bankruptcy cases are waiting to occur
in the industry inthe next few days and the default cases cold go well beyond
Rs300 to Rs 500 crore.
With margins thin to poin of almost being non-existent, a vast majority of the
Indian diamond industry players, especially the smaller ones with no direct
access to rough or polished markets, had diverted large sums of money to the
stock market.
It was s sort of hedge to make up for the poor profitability in polishing
diamond and lacklustre demand from staple markets like the United States.
A leading diamond manufacturer said,”This  was waiting to happen. Traders,
small and madium manufacturers with no access to cash, rough and polished
diamonds will go bankrupt after facing huge losses in the stock market.”
Sources said that more than 75 per cent of the people connected with the
diamond industry, had pumped in their investments in the stock market to
make up for the poor profitability in the industry and the lacklustre demand.
“There are hundreds of diamond trader who have lost huge sums of their investments
in the stock market crash.Now they have to repay their creditors,which seems
imppssible at this stage,”said Praveen Nanavati, former president of Surat Diamond
Association(SDA).
According to Nanavati, this diversion of money was blamed for the liquidity
crunch in the Indian diamond market. But those funds were always there, ready
to flow back into the first sing of improved profitability. Now it,s gone forever.