FIIs Kick Off A 3000-Point Surge In Sensex
Data suggests that buying pressure has returned, this time in the upward direction.
On Episode 451 of The Core Report, financial journalist Govindraj Ethiraj talks to Alok Sama, former President & CFO of SoftBank Group International. The excerpt is from a larger Interview we will be featuring over the weekend from our upcoming Business Books series of the The Core Report.
(00:00) Stories of the Day
(01:00) FIIs kick off a 3,000-point surge in Sensex in hot December
(03:55) Rupee projected to go below Rs 85 to the USD
(07:18) Low air cargo capacity out of India will constrain smartphone exports
(09:20) Sugar prices have fallen sharply
(10:20) Understanding Masayoshi Son, the man behind Softbank
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it's Friday, the 6th of December and this is Govindraj Ethiraj, headquartered and broadcasting and streaming from Mumbai, India’s financial capital.
The top stories and themes
FIIs kick off a 3,000-point surge in Sensex in hot December.
Rupee is projected to go below Rs 85 to the USD.
Low air cargo capacity out of India will constrain smartphone exports.
Sugar prices have fallen sharply.
Understanding Masayoshi Son, the man behind Softbank.
The Markets
The stock markets have resumed, if one might say so, their upward climb after an almost two month break.
While markets have risen in between, selling pressure has constantly kicked in.
The data suggests that buying pressure, particularly from Foreign Portfolio Investors who do determine sentiment and direction to a fair extent, has returned, this time in the upward direction and despite the new year not having begun yet.
FIIs have been net buyers second half of November onwards.
In five trading sessions, the Sensex has jumped nearly 3,000 points, crossing the 82,000 mark, while the Nifty breached the 24,800 level.
The benchmark indices were up and then down today, once again, but continued to close on the higher side as buying pressure was higher than selling.
The Sensex closed 809.53 points higher at 81,765.86 while the NSE Nifty50 ended at 24,708.40, up 240.95 points.
IT stocks rose on the back of a strong US economy while financials extended their rally to a fifth session on hopes of easing domestic policy, Reuters reported.
There is some expectation of an interest rate cut today by the Reserve Bank of India. Some because not all economists agree on this, including some we spoke to who spoke of the greater likelihood of liquidity easing measures through reduction of the cash reserve ratio rather than an interest rate cut right now which in any case would take some to transmit.
The question of an interest rate cut assumes importance in the light of the slower GDP numbers for the latest quarter at 5.4%, below expectations and projections.
Speaking of interest rates, IT stocks, which earn more than 60% their revenue from the US, rose yesterday after Federal Reserve Chair Jerome Powell said the U.S. economy remained stronger than expected in September.
Elsewhere, foreign investors have stepped up buying of Indian government bonds in the last four sessions, after weaker-than-expected economic growth data last week triggered expectations of monetary policy easing by the central bank, reported Reuters.
These investors, many who are presumably expecting a rate cut, bought bonds worth over 90 billion rupees ($1.06 billion).
Foreign investors had sold bonds for most of November with US yields remaining high.
Rupee Poll Down
The Indian rupee will break through 85 per U.S. dollar to hit a new low in the next six months even as the Reserve Bank of India continues to intervene to stem the currency's losses, according to a Reuters poll of FX strategists.
The Dec. 2-4 Reuters poll of 41 FX strategists forecast the rupee to trade around 84.85 to the dollar and 85.12 to the dollar in three and six months, respectively, survey medians showed new lows.
The rupee was trading at around 84.72/$ on Wednesday.
"The only way for USD/INR is weaker, and this time around it's even more pressing for two reasons. One is the external headwinds... and the second is the domestic macro mix has changed for the worse," said ANZ FX strategist Dhiraj Nim.
U.S. President-elect Donald Trump's proposed tariffs, which are widely expected to create more inflation in the world's largest economy, have pushed up the dollar by nearly 6% since October.
Reuters reports that since early October, the RBI has spent nearly $50 billion from its vast FX reserves to shield the rupee from the dollar's relentless strength, but it still weakened to a record low of 84.74/$ on Tuesday.
Foreign investors have pulled more than $13 billion from the country over the same period.
Median forecasts showed the currency would weaken around 1% to 85.49 to the dollar in a year, with expectations ranging from 82.17 to 88.00.
The trade-weighted real effective exchange rate (REER) shows the rupee is overvalued by around 7%, according to RBI data, something economists have been pointing out to The Core Report as well.
Oil Prices
The OPEC+ oil producers’ alliance has postponed plans to unwind several formal and voluntary crude production cuts into 2026 amid a lukewarm outlook for global demand, according to delegate sources and internal documents, reported CNBC.
Under its formal output strategy, the broader OPEC+ coalition is now restricting its combined production to 39.725 million barrels per day (bpd) until Dec. 31, 2026, after previously only applying this quota throughout 2025.
Eight OPEC+ members will now extend their 2.2 million-barrel-per day voluntary production decline into the first quarter, and will begin hiking production incrementally between April and September 2026.
Several OPEC+ members will also be postponing the unwinding of a second 1.7-million-barrels-per-day cut until the end of next year. This latter production decline was previously only set to last through 2025.
The problem is still on the demand side with prices staying subdued, including under $73 right now.
Not to be forgotten is President-elect Donald Trump’s campaign promise to step up drilling which of course could play havoc with prices hurting the very American oil companies he ostensibly wants to do good for.
“In our view, the fundamentals for oil prices remain weak, and the risks to prices are skewed to the downside.”
Cargo Capacity
India has big smartphone export ambitions but there is a fundamental problem, cargo capacity to carry the products out of India and then some old problems, including delays at customs.
Last month, the Indian Cellular and Electronics Association (ICEA) raised concerns with the government about infrastructure challenges at the country’s airports, highlighting the need to expand airport capacity and improve cargo turnaround times.
“We often face situations where there’s simply no space to unload cargo, which adds unnecessary delays to the shipment. Then there is the inspection and customs clearance process that further extends the time. It is a system that needs efficiency at every step,” Rajesh Sharma, principal advisor to the ICEA, told my colleague Zinal Dedhia at The Core.
India’s smartphone exports, valued at $10 billion in FY2022-23, have climbed rapidly thanks to factors like the production-linked (PLI) schemes, government initiatives like Make in India, and companies shifting bases from China to India.
But surrounding infrastructure and logistical capabilities needed to send these phones to their destinations haven’t kept pace with this growth. Logistical bottlenecks threatened to hinder further growth for smartphone companies like Foxconn, Pegatron, Tata Electronics and Samsung who all manufacture and export from India.
Major exporting hubs like Delhi, Bengaluru and Chennai are struggling with limited cargo infrastructure.
The lack of dedicated freighters, aircraft that are designed to just carry cargo, exacerbates these issues, as most electronics shipments depend on the belly space of passenger aircraft.
In comparison, countries like China rely on well-established freighter networks, enabling them to dominate global smartphone exports.
India, on the other hand, remains reliant on the limited belly capacity of passenger aircraft for its exports, constraining its ability to scale up shipments efficiently.
With India projected to achieve $14 billion in smartphone exports next year, experts said that investment in cargo infrastructure is vital to sustain this momentum.
Sugar Prices Down
Sugar prices have fallen to their lowest level in 1-1/2 years due to excess supplies.
This has made it difficult for mills to pay farmers the cane price as the crushing season gains momentum, industry officials told Reuters.
"Sugar prices have fallen below the cost of production. This makes it difficult for mills to pay the revised cane price unless sugar prices rise," the president of the West Indian Sugar Mills Association told Reuters.
Wholesale sugar prices at Kolhapur in western state of Maharashtra have fallen nearly 8% in the past four months to 33,675 rupees ($397.60) per ton, the lowest since June 2023.
Indian trade bodies have been demanding an increase in the MSP, saying the government has raised the mandatory procurement price of sugarcane in recent years while the MSP has remained unchanged since 2019.
Sugar prices are falling as demand has decreased after the festival season, and new season supplies have begun, said Ashok Jain, president of the Bombay Sugar Merchants Association.
Business Books Excerpt
And before we go, we have an excerpt of an interview coming up with Alok Sama, the author of a memoir, The Money Trap: Lost Illusions Inside the Tech Bubble.
Sama was famously President & CFO of SoftBank Group International (“SBGI”) and Chief Strategy Officer for SoftBank Group (“SBG”), also being the company that invested in high profile ventures like Oyo where the outcomes arguably have not been as high profile, at least till date.
Most of Softbank’s high visibility investments were led by Masayoshi Son, the founder of the Japan-based fund.
I asked Sama, a former senior managing director at Morgan Stanley and who worked closely with Son about working with him and how he would describe his former boss.
INTERVIEW TRANSCRIPT
Alok Sama: The way he describes himself is probably the best way to understand him. He calls himself the crazy guy who lives in the future or crazy guy who bets on the future.
So, he's a futurist in that term, futurist, visionary. It's it's used a little bit usefully in the Indian context. I don't know how many people you'd put in that category, maybe Dhirubhai Ambani.
I mean, there's only a handful of people. And they come along once every few decades, literally. So, he's one of those people.
He's iconic in that way. And he's proven that time and time again, foreseeing the smartphone revolution, the internet disruption, and now AI. And betting big time monumentally by any standards on those disruptive changes in technology.
So, that's the most important characteristic. On a more personal basis, I found him to be charming, engaging, funny. We had a lot of fun together, a lot of laughs with him.
The other more business characteristic, actually, maybe that should have come second. A lot of visionaries, you think that big picture people don't focus on the detail. His focus on, as an operator, on operating details can be microscopic.
If there's a described this incident where there's a defect, a blind spot in Sprint, and Sprint was a phone company in the US that SoftBank owned, that there's a blind spot there. He will work with his engineers, identify it, go tell the Sprint people to fix it. That degree of focus is very unusual.
Govindraj Ethiraj: When you say blind spot, you mean somewhere where there's no coverage, there's no signal, right?
Alok Sama: So, that kind of focus is rare, or you don't normally associate that with people who you kind of think of as big picture visionaries. That's very unusual.
Govindraj Ethiraj: Because he was also an inventor and a technologist.
Alok Sama: Yes, yeah, he has. I haven't got back and fact checked this, but if I'm not mistaken, used to be, I think the number was 350 patterns, and it's probably more by now. But yes, I mean, he's a technologist in the true sense.
