The guests sit down to dinner, and Betteredge is in charge of waiting the table, so he's in the background watching the whole scene.
Rachel wears her new diamond like a brooch at the front of her gown.
Mr. Murthwaite, one of the guests, is an English explorer and an expert on India.
He tells Rachel that her diamond is of religious importance in India, and that if she ever travels to India, she should leave the diamond at home – traveling in India wearing a diamond as an ornament would make her a target for assassins.
Lady Verinder seems worried, but Rachel is excited to hear about her potential danger (since, after all, she's safe in England).
The conversation at dinner is really awkward, for whatever reason. People keep making social mistakes or saying the wrong thing.
For example, Franklin gets in an argument with Mr. Candy about the medical profession.
Mr. Candy is a doctor, and doesn't like to be lectured on his profession.
Mr. Candy tells Franklin that prescribed laudanum (a mixture of alcohol and opium) would solve Franklin's insomnia (remember, Franklin hasn't slept well since he quit smoking cold turkey).
Franklin pooh-poohs this idea – he thinks that prescription medicines are bogus.
Historical Context Lesson: in the nineteenth century, people took laudanum like we take aspirin or Advil now. Folks took it for headaches, insomnia, stomachaches, cramps, nervousness…and they didn't realize how addictive it was! It wasn't until the mid-1800s that scientists started to realize what addiction was. Even after addiction was identified, people still took laudanum for a whole bunch of different ailments. And now, back to the story.
At the end of dinner, the ladies go to the drawing room and the men stay in the dining room for another glass of wine or port.
Another quick Historical Context Lesson! This was the tradition for dinner parties in nineteenth-century England. After everyone had finished eating, the women would go and hang out in the drawing room (basically a formal living room) while the men talked politics or swapped dirty jokes over another glass (or three) of wine. Then they'd go and join the women in the drawing room for tea and a card game or whatever.
Now back to the story. Just after the ladies left the dining room, Franklin hears the sound of the Indian drum – the three Indian jugglers have arrived!
Betteredge tries to tell them off before anyone else gets there, but Godfrey's two hare-brained sisters have gotten there first, and are all excited to see them perform on the patio.
Rachel, meanwhile, is standing there in front of the Indians with the Moonstone clearly visible on the front of her dress!
The Indians do a few magic tricks, but then Mr. Murthwaite goes up to them and asks them something in Hindi.
They're shocked that one of the white guys knows Hindi, but they answer him.
Then they bow and leave.
Later, Mr. Murthwaite has a private conversation with Franklin and Betteredge.
He assures them that the Indians aren't really street performers – they're high caste Brahmins, who are disguised as street performers for some reason.
They tell him their suspicions about the diamond, and he tells Franklin that he's had a few narrow escapes.
Mr. Murthwaite tells them that the Indians wouldn't stop at murder to get their diamond back.
Mr. Murthwaite then advises Betteredge to let the guard dogs have the run of the property over night, just in case the Indians return and attempt to break in.
All the guests go back to the drawing room to finish the evening.
Betteredge sees Mr. Candy speaking to Godfrey privately.
It begins to rain pretty hard, so the guests hurry to get into their closed carriages to drive home.
All except Mr. Candy – he has an open carriage.
Betteredge advises him to wait it out, since he'll get soaked driving home in an open carriage.
Mr. Candy laughs it off, and drives away in the rain.