OUTLOOK-India silver demand picks up, more falls eyed

MUMBAI May 2 (Reuters) - A fall in silver prices from all time highs last month has revived demand for the white metal, but only bigger dips could strengthen retail buying, traders said on Friday. Unlike gold, the silver market has not been boosted by the Akshaya Tritiya festival, which means the while metal has to rely mainly on a correction to see more sales, traders said.

Akshaya Tritiya, when people buy precious metals to invoke lasting prosperity, sees more of gold sales in south India where it is popular, traders said.

"The prices have fallen, so there is a little bit of demand," said Suresh Hundia, president of the Bombay Bullion Association and also a large silver trader in Mumbai.

"But it is mainly due to short covering by showrooms and manufacturers who hadn't bought since December."

Silver prices on the MCX's continuation chart MSVc1 were at 21,700 rupees per kg on Friday, down 21 percent since an all-time high of 27,500 rupees on March 17.

But when seen over the year, prices are up 19 percent, too high for price sensitive Indians.

"The demand has picked up mainly for weddings as people like to buy silver articles to give as gifts," said Ganesh Agarwal of Shiv Sahai & Sons, a large wholesaler in Chennai.

Both Agarwal and Hundia said a dip to levels between 17,000 rupees and 18,000 rupees could spur silver demand in a big way in the retail market.

OUTLOOK BEARISH

Silver faced the prospects of more falls, said Debjyoti Chatterjee, associate vice president at MAPE ADMISI Commodity Research.

"Silver is looking down in the next two to three weeks... after that it may rebound," said Chatterjee.

A corrective gold and subdued silver demand could lead to more falls, possibly in the 17,000 rupees to 18,000 rupees terrain, Chatterjee said.

India's annual silver consumption is over 3,000 tonnes, higher than gold's over 700 tonnes.

While industrial demand for silver has remained steady, jewellery and investment demand has taken a hit this year due to the high prices, traders said.

(Reporting by Ruchira Singh; Editing by Prem Udayabhanu)