If diamonds are a girl’s best friends, the dazzling gem has just made a whole lot of new BFFs.
The affluent Indian consumer has discovered diamonds. This group has been among the biggest purchasers of gold in the world, as the metal has important cultural significance. Gold traditionally represents wealth, status and prosperity and is part of every Indian wedding and other celebrations. (Read More: Diamonds Trump Gold as Investor's Best Friend: Pro.)
Recently, the World Gold Council reported that during the second quarter the gold jewelry sector posted a 15 percent year-over-year decline due to the sharp drop in demand in India.
Brian Hicks, co-manager of the Global Resources Fund, says “that’s mainly being driven by weakness in their [India’s] economy, some weather-related issues pertaining to monsoon season, and the depreciation of the rupee which has made gold more expensive.”
But there might be one more to add to the list — a change in fashion. While traditionally Indian women have been known for their obsession with gold, several Indian jewelers in India said diamonds and semi-precious stones are becoming increasingly popular among affluent women. (Read More: .)
Madhuri Parson, CEO of MadhuriParson.com, specializes in high end Indian-inspired jewelry and told CNBC that there’s definitely been a change in taste.
“Demand has definitely changed in the last year. Usually our gold products are the best sellers but recently I’ve seen semi-precious stones and diamonds become more popular and fashionable. To date our precious gem stone and diamonds business has grown 60 percent from last year,” said Parson.
Citi’s luxury analyst, Oliver Chen, says there’s plenty of room for growth for diamonds and precious stones in India. (Read More: Are Diamonds the New Gold for Individual Investors?)
“Rough diamond consumption is a $2 billion opportunity in India,” he said.
“That is growing five percent year-over-year given the rise and size of India's middle class,” Chen said.
—By CNBC's Seema Mody
—CNBC's Jessica Golden also contributed to this article.
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