Indian Markets Fall Below $4 Trillion
India’s stock market capitalisation has dropped below the $4 trillion mark for the first time in 14 months, thanks also to the weak rupee against the US dollar
On Episode 510 of The Core Report, financial journalist Govindraj Ethiraj talks to Indrani Bagchi, CEO of Ananta Aspen Centre as well as Sheetal Sapale, Vice President at Pharmarack.
(00:00) The Take
(05:57) Indian markets fall below $4 trillion
(08:06) China gained $1.3 trillion even as India lost $760 billion as funds rotated back into China after DeepSeek
(10:17) What was India hoping to achieve at the India-US trade talks?
(20:41) Why heart failure therapies and diuretics are lifting the growth of the cardiac drugs market
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 Monday, the 17th of February and this is Govindraj Ethiraj, headquartered and broadcasting and streaming like always from Mumbai, India’s financial capital.
The Take
It must be a matter of some irony that even as the Trump administration was attempting to thrust a Lockheed Martin F35 aircraft down India’s throat, figuratively speaking, a video of a Russian Su-57 fifth generation fighter jet doing lazy reverse and side thrusts in mid air at the Bangalore Aero Show last week was going viral.
The Su-57’s flying was so effortless, someone on a group chat remarked, it was like holding my Vodka while I show you a few cool moves.
It did not help that the test pilot was Sergey Bordan, all of 60 years old.
Quite like Top Gun’s Maverick played by Tom Cruise at 57 years old.
That’s in the film while he was 59 when the film released 3 years ago.
The Top Gun connection ?
Well, Bogdan claims some of the moves, one being an `intense nose spin’ in the film Top Gun were inspired by Russian dogfight procedures.
The F35 Lightning II was in Bangalore too and put on a handsome display by all accounts but there was no viral video, since these things are often an indicator of popularity or even existence.
So will India buy F35s because of Trump’s insistence.
We obviously don’t know but it seems very unlikely.
It is also a fact that India’s defence requirements are tightly interlinked to Russia and have been so for over 60 years.
It does seem that coming out of a meeting between President Donald Trump and Indian Prime Minister Narendra Modi, that there is no immediate threat of blanket tariffs on Indian exports to the US.
As Trump is talking of reciprocal tariffs which are country by country and would take time to work out.
Columnist Shankkar Aiyar points out that the reciprocal tariff threat is mired in complexities — the US Harmonised Tariff Schedule for 160 countries is spread over 98 chapters, and has over 18,000 10-digit codes for imports.
Imagine its implementation in the backdrop of the promised purge by the department of government efficiency!
The U.S. has a $45.6 billion trade deficit with India. The U.S. trade-weighted average tariff rate by the way is around 2.2% while India's is 12%.
It is instructive to see how tariff wars could play out.
The Indian alcoholic beverage industry has fired what could be the first shot by saying with the Government’s move to reduce customs duties on bourbon whiskey imported from the US from 150% to 50%, states in India should also withdraw excise concessions on imported liquor.
This is because lower customs duties would lead to cheap imports and hit Indian producers of premium whiskeys.
You can expect and imagine similar scenarios across other industries where India has cut import rates and similarly played out in the United States, though on the other end.
In the US, tariffs will push prices up and make it difficult for local US manufacturers who are lets say importing bulk drugs from India and converting to medicines for retail.
The trade dynamics and shifts are not unusual except that it is happening all at once for scores of products.
And the worst is the uncertainty and daily threats and shifting goalposts.
It’s not very clear then what the trade deal between the two could look like despite its stated goal of more than doubling bilateral trade to $500 billion this decade.
Or does that mean in a decade.
India has promised to buy more US defence equipment, energy, among other products. And of course allow for cheaper whiskey and high end Harley Davidson bikes.
And maybe Tesla cars with little or no import restrictions since what must be good for Musk must be good for America and vice versa as it looks like from here.
India exported goods worth $73.8 billion to the US in 2024, including medicines, telecom instruments, jewellery, petroleum products, garments, and engineering goods.
Ajay Srivastava, founder of New Delhi think tank Global Trade Research Initiative and a frequent guest on The Core Report told Reuters that for nearly 75% of U.S. exports to India, like petroleum products and chemicals, average tariffs are already below 5%, so a trade deal that could scrap duties is unlikely to be a major concern.
Maybe there will be an opportunity in this, maybe not.
On the other hand, American companies continue to expand in India whether in manufacturing or in services or to address the domestic market.
American pharma major Eli Lilly and Company last month announced its new global capability centre (GCC) in Hyderabad, the second such facility in India which the firm said will strengthen its digital strategy and service delivery and employ over 1,000 highly-skilled professionals.
The centre will be operational later this year while the first one was opened in 2016.
While Trump and his teams continue to use a carrot or stick approach to negotiating with nations, including India, American companies continue to do what is in their best interests, which is to invest in the Indian market and its people.
So while a 62-year-old Russian pilot with some crazy maneuvers might rightly wow Indian netizens and maybe help clinch a few more defence deals, the rest of the sky is quite wide open for both India and the US.
The top headlines and theme
Indian markets fall below $4 trillion
China gained $1.3 trillion even as India lost $760 billion as funds rotated back into China after DeepSeek.
What was India hoping to achieve at the India-US trade talks ?
Why heart failure therapies and diuretics are lifting the growth of the cardiac drugs market.
The Markets Are On Edge
Last week was not a memorable one.
The interesting thing is that we have seen sudden falls in the stock market, starting in 2020 and thus are not so accustomed to gradual and steady declines and what they might represent.
So last week saw consistent declines on top of previous weekly declines which in many ways are more worrying then sudden and dramatic falls and of course recoveries, like just after election results in May 2024.
Though most of those gains after May 2024 are now lost.
India’s stock market capitalisation has also dropped below the $4-trillion mark for the first time in more-than-14 months, thanks also to the weak rupee against the US dollar.
It was over $5 trillion in May last year.
The Nifty Smallcap 100 index formally entered a 'bear' phase on Friday with the index slipping around 22 per cent from its peak of 19,716.20.
It was down around 4 per cent on Friday to close at 15,373.70 levels.
The major indices took less of a beating, recovering and fighting back to some extent.
The S&P BSE Sensex closed around 200 points lower at 75,939 levels while the Nifty 50 index was down 102 points to 22,929 levels.
The broad market indices are trading at higher valuations than their long-term averages.
The small-cap index is trading at a forward 12-month price-to-earnings (PE) ratio of 24.5x, well above its 10-year average of 16x, according to brokerage Motilal Oswal Financial Services, reported Reuters adding the mid-cap index's PE ratio of 35.8x is way above its 10-year average of 22.4x.
In contrast, the benchmark Nifty 50's PE ratio of 19.9x is just below its 10-year average of 20.6x.
Gold prices meanwhile have slowed down but it was on course for its seventh consecutive weekly rise, the longest since 2020 according to Bloomberg thanks to continued buying from central banks including China.
DeepSeek Breakthrough
DeepSeek’s breakthrough in artificial intelligence is helping drive a rotation of stock funds back into China from India.
Hedge funds have been piling into Chinese equities at the fastest pace in months as bullishness on the DeepSeek-driven technology rally adds to hopes for more economic stimulus. In contrast, India is suffering a record exodus of cash on concerns over waning macro growth, slowing corporate earnings and expensive stock valuations.
China’s onshore and offshore equity markets have added more than $1.3 trillion in total value in just the past month amid such reallocations, while India’s market has shrunk by more than $720 billion.
The MSCI China Index is on track to outperform its Indian counterpart for a third-straight month, the longest such streak in two years.
DeepSeek has shown “that China actually has companies that are forming a vital part of the whole AI ecosystem,” said Ken Wong, an Asian equity portfolio specialist at Eastspring Investments. His firm has been adding Chinese internet holdings over the past few months, while trimming smaller Indian stocks that had “run up way past their valuation multiples.”
US LNG Exports
U.S. President Donald Trump's administration said on Friday it has granted a liquefied natural gas export license to the Commonwealth LNG project in Louisiana, the first approval of LNG exports after former President Joe Biden paused them early last year.
The exports are approved to go to markets in Asia and Europe.
Energy Secretary Chris Wright, whose agency is responsible for approving the shipments, said exporting U.S. LNG "strengthens the U.S. economy and supports American jobs while bolstering energy security around the world."
The U.S. is trying to increase its LNG exports to help reduce Europe's dependency on Russian gas after Moscow's invasion of Ukraine three years ago.
Trump ordered a lifting of the freeze on LNG export approvals the day he came into office for a second time on January 20.
Commonwealth LNG, which has waited longer than any other company for its permit, wants to build a 9.5 million metric ton per annum export plant in Louisiana to sell to countries that do not have a free trade agreement with the U.S.
India US Trade Deal
Back to the US-India trade talks
The two countries agreed on Thursday to start talks to freeze an early trade deal and resolve a standoff over tariffs following India’s promise to buy more U.S. oil, gas and military equipment and fight illegal immigration.
Specific steps on energy purchases and reducing imports from the India side have already been kicked off.
The series of agreements emerged after talks between U.S. President Donald Trump and Indian Prime Minister Narendra Modi at the White House, just hours after Trump railed against the climate for U.S. businesses in India and unveiled a roadmap for reciprocal tariffs on countries that put duties on U.S. imports, Reuters reporting quoting Trump saying.
"Prime Minister Modi recently announced the reductions to India's unfair, very strong tariffs that limit us access to the Indian market, very strongly," Trump said. "And really it's a big problem I must say."
The deal to resolve trade concerns could be done within the next seven months, India's Foreign Secretary quoted saying by Reuters.
A joint statement welcomed India’s steps to lower tariffs on select U.S. products and increase market access to U.S. farm products, while seeking to negotiate the initial segments of a trade deal by the fall of 2025.
I reached out to Indrani Bagchi, CEO of Ananta Aspen Center, a foreign affairs think tank and also a columnist with Times of India on diplomatic issues and began by asking her what was India hoping to achieve at the talks with Trump and what did it actually achieve ?
INTERVIEW TRANSCRIPT
Indrani Bagchi: One of the things is, you know, as you know, Trump has come in as, I mean, the only description I have is an agent of chaos. So the unpredictable, he's been slapping tariffs all over the place. But we also know from the last time round, that what Trump really wanted was a trade deal with India.
It didn't happen because of Indian sort of tardiness, or, you know, how it ended with tensions between Commerce Minister Piyush Goyal and Bob Lighthizer. The same team is back. Bob Lighthizer is no longer USTR, but far more powerful, actually, because USTR itself has been demoted, so to speak.
So the reason for going in early was to signal to Trump that, yes, we are a high tariff economy, as Trump has repeatedly described India. But we are also willing to step beyond, make a deal. So you saw a couple of sort of confidence-building measures within the budget, with reduced prices on bourbon, reduced tariffs on bourbon, on Harley-Davidson, such like.
And a very clear message that they would actually get a trade deal done by the end of this year, since you know the entire business economic landscape so well, you know what kind of a mountain that would be for Indian negotiators. But there is very clear political intent that they want to get a deal out by this year. Now, the second reason for this is also to reduce the unpredictability of the whole Trump-India relationship.
When you do a trade deal, things become predictable, things become, it normalises. And the third reason is the Indians also want market access. They are also looking for market access.
The Americans, of course, are looking for market access, lower tariffs, etc. And one of the things that India hopes, I think, to put into a larger trade is not only tariffs, but also a technology access, a technology alliance that can go into the deal, and a mobility provision. As somebody, one of the people in the Trump meeting said later, that, you know, there are some 300-500,000 Indian students paying full top dollar fees, tuition to American universities.
Why should that not count as an economic sort of service? So I don't know how you describe it. So this is something that you will see put on fast track.
And I think that will be very interesting to watch, certainly in the next few months.
Govindraj Ethiraj: There are two points that the Trump administration seems to have highlighted. One is defence equipment and that India should buy more. And the second is oil and gas.
I think the oil and gas part seems a little easier because India is obviously constantly in the market, including for gas specifically, and we will buy, and we've already been buying more. How is that likely to pan out? Because that is something that India has already, let's say, had conversations, is having conversations, there are deals and will for years now.
Is that likely to shift things around or how does that work?
Indrani Bagchi: So one of the things that India has also made a point is that, you know, we would like to buy more of your stuff, but you make it insanely hard for us to do so, because your bureaucracy, the US bureaucracy is actually far more hidebound and fossilised than even the Indian bureaucracy. And in fact, the defence ministry in the last few months has actually changed its procurement rules. But a lot of what India also is looking for is to tell the Americans that, you know, we will buy the Stryker, the Poseidon, P8I Poseidon surveillance aircraft.
Govindraj Ethiraj: F-35, of course, the big one.
Indrani Bagchi: F-35, we cannot get. I mean, let us, we'll talk about that. F-35 is, let's say, a bridge too far at this point.
We need G414 jet engines for the Tejas too. That has been delayed by the US. That is something that India is very keen to get, to put on the fast track.
We are willing to pay big money on this. So it's the American side. As for the F-35, there will be a problem because we have the S-400s from Russia and there is an automatic target detection of the S-400 is the F-35.
So that's going to be a bit of a...
Govindraj Ethiraj: Just to come back on this point, you said that the delays were on the American side and why is that? Is it because of perceived, I mean, is there a sanction element here or what's the reason?
Indrani Bagchi: No, no sanction element because the G414 jet engines that the deal had been done with the Biden administration some time back, it's basically American bureaucracy that's at work. That's not, I mean, they invent all sorts of reasons, but it's basically it's bureaucracy at work.
Govindraj Ethiraj: But you're saying Boeing can strike a deal to sell it to India on an Indian company.
Indrani Bagchi: Boeing has already done the deal. That deal is already done. It needs Pentagon clearances.
That deal could work.
Govindraj Ethiraj: Indrani, you've also passed through the Munich security conference and happened to meet most of the dramatic personae who are involved in these Modi talks, as well as the being in Munich where there was a lot of interesting developments and statements being made. So your takeaways from India lens?
Indrani Bagchi: Biggest takeaway is this is an era of upheaval. We are actually watching history in the making. Europe is stunned, shocked, apoplectic with outrage because the Trump administration has made it very clear that they are not picking up the bill for the European any longer.
So there was a lot of hand-wringing and a lot of soul-searching among the Europeans. And in fact, it was a full European naval gazing two days. But very clear takeaways from the defence secretary who did not come to Munich, but from JD Vance who did, that they're looking for an end to the war with Russia.
They're looking for, and if that means compromises have to be made, the Europeans have to suck it up, literally, because the European position so far has not been to look for an end to the war. They would just want Putin to disappear somehow. I mean, go back to...
And anybody who has looked at the world knows that Putin is not the first leader, not the last leader to invade another territory. The point is, how do you get to a peace deal that makes it impossible for a war like this to happen again? The Europeans are taking a maximalist position.
The Americans have said, nothing doing, because we are bankrolling it and we don't want to bankroll this war any longer. So Zelensky was there telling everybody that we will not be able to survive without American support. So very clearly NATO membership not on the cards for Ukraine.
European and Europe will have to foot the bill for both security, whatever security guarantees that Ukraine asks for, and rebuilding Ukraine. Although as a real estate developer, I'm pretty certain Trump is looking for a lot of good deals on that front.
Govindraj Ethiraj: And last question, anything specific that stands out from an India point of view, Intani, on this? Yeah, from Munich.
Indrani Bagchi: We are in a good place. And as long as we stay sharp on very clearly articulating our strategic aims, and we've been at it for a couple of years now, this whole idea of multipolarity, the multipolar, frankly, the multipolar world is here. We are a pole and we have to, you know, we now just need to acknowledge that, yes, this multipolar world has come.
It's no longer out in the distance. It's here now. So we play, we should be playing our games, like the Gulf is a big place.
And in fact, I'm just going to add this to your, one of the biggest takeaways from the Trump-Modi summit has been the reaffirmation of the Western quad called the I2-U2, that is India, UAE, Israel, and the US. The I2-U2 and the IMEC, which is the Economic Trade Technology Corridor between India and Europe, that was very much a part of the summit meetings between Modi and Trump. It was something that the Southern Europeans are very interested in.
And while the, so my sense is the next war that will be targeted is the Gaza War, because that's the only impediment to the IMEC that goes through. In fact, IMEC is, if Bonsai comes down, it'll change the entire landscape forever.
Govindraj Ethiraj: Right. Indrani, thank you so much for joining me.
Indrani Bagchi: Thanks, Govind.
Why Some Sub-Categories of Drugs are More Critical Than Others?
Sales of drugs are usually classified in broad categories like Cardiac, gastro intestinal and anti-infectives.
All these categories are large and growing fast though in some periods, there are sub categories within them that grow much faster and thus lift the broader category.
Understanding which sub category of drugs is driving sales is a good way to understand shifts in disease profile and thus how we should be possibly more forwarned in our own daily lives.
For example, heart failure therapies grew 18% year on year while diuretics grew 17% under the cardiac category while anti thrombotic agents grew 18%.
On the other hand, oral electrolytes and probiotics grew 26% and 24% in the month of January within the category of gastro intestinal drugs.
Under vitamins, appetite stimulants grew 32%.
Under the pain category, drugs for rheumatoid arthritis grew 23%.
So while this obviously lifts the pain category, it's useful to know which specific condition seems to be driving a good part of it.
Similarly, in Neuro or central nervous system medicines, the anti Alzheimer category grew 15%.
And finally, in the derma category, anti dandruff grew 20% which is interesting.
Some of this could be seasonal but some not.
All these sub categories have sales of more than Rs 200 crore annually, according to Pharmarack, the pharma intelligence tracker.
I spoke with Sheetal Sapale, Vice President at Pharmarack and began by asking her to talk about the trends she was seeing in these categories and more importantly, what the numbers were telling us.
INTERVIEW TRANSCRIPT
Sheetal Sapale: Since cardiac category is one of the biggest category and the fastest or you know high growth category that we see today, it also reflects the growth of lifestyle diseases that are happening in the market. So what I'm gathering from this is the cardiac categories, it's not just the anti-hypertensives. In cardiac category, anti-hypertensives contribute to almost more than 50% of the cardiac category and hypertension as a condition is you know something which naturally happens as one ages.
So that may be an age-related aspect and to some extent a lifestyle-related aspect. But then if you look at other categories within cardiac, where you know you require lipid lowering drugs, anti-anginas, heart failure therapies, they are more critical and they are more of you know increasing lifestyle disease and impact of those deteriorating lifestyle and impact of that happening on the people's health. When we did analysis of these areas, the problem seems to be pretty serious because if you see these categories are growing double digit not just for the month of January but in this last whole year.
If I were to look at the mat growth of these categories, even at a mat level these critical categories have grown by double digit. So it's not just over last month that it has grown highly but then over last year these conditions have increased significantly. That is what I try to highlight beyond the chronic thing, something which is impacting the overall health of the masses within the country.
Govindraj Ethiraj: So you're saying that lipid lowering drugs and heart failure drugs are being consumed at a dramatically higher level than 23. That's one. So I'll come back to that in a second.
Some of the other categories that you've looked at is gastrointestinal where you're saying for example probiotics has seen a huge jump. So again my question in this case is or oral electrolytes, so why is the jump seeming so sudden as in I can understand a gradual rise?
Sheetal Sapale: Yeah so this is again a seasonal pattern. Antidiarrheals is a condition which usually one sees in the monsoon season okay. But then if you look at the festive season of India evolves.
If you see in the month of December, Jan this is a period where lot of marriages happen, lot of festivities do happen in this country and this again correlates with lot of eating outside and leading to conditions like diarrhoea or lot of loose motions where you need to consume lot of probiotics, lot of oral electrolytes come into picture. So this is what is getting reflected in the growth of these categories.
Govindraj Ethiraj: Right but it's still higher than what it was the year before. So the same conditions would have happened at the same time of the year or season in the year before as well right?
Sheetal Sapale: Yeah the consumption definitely has improved. Our consumption has definitely increased as compared to what it was last year. Also it is not that anything new or new activity has happened in the market because in majority of the cases this growth is because of some existing older products and no new introductions that have happened in the market.
So these are sort of OTC products where or you know almost OTC, OTX products whose consumption has improved.
Govindraj Ethiraj: Another segment that seems to have grown quite rapidly is rheumatoid arthritis and the pain. So again why the sudden jump there?
Sheetal Sapale: Rheumatoid arthritis again if you look in winters arthritis is the condition which aggravates in winter season and that is getting reflected in the growth in the rheumatoid arthritic category. Also certain products which have come in the market, MABS, the TINIBS in the market which are you know little newly introduced molecules in the market which have also driven the growth of this market. Since they are biosimilar or biological products in terms of value they are on a relatively higher side.
That's the reason why they have pushed the value growth of the market also well.
Govindraj Ethiraj: Some of the other categories are appetite stimulants that seems to have grown quite heavily. So why are people I mean are people eating more or trying to eat more or?
Sheetal Sapale: Appetite stimulant it's again a sort of I would say a category which falls more into your tonic category wherein you are trying to people who are or children or adults who are malnourished or adults who really are weak you need to push them their eating habits so that they start consuming more. So that is something which comes in the appetite stimulant categories. So I don't say that people want to eat more but it's more of a condition where you want to push people who are weak to eat more.
Govindraj Ethiraj: So now if across the segments of course these are very different disease conditions but across these subcategories where we talked about lipid lowering, anti-anginal, diuretics, probiotics, rheumatoid arthritis and you also touched upon areas like anti-dandruff. What are the biggest categories and therefore thus reflecting what are some of the faster growing disease conditions or health conditions?
Sheetal Sapale: The smaller categories within the cardiac segment if you look at the lipid lowering or the cardiac drugs these are the categories of growth in these categories indicates more critical aspects in heart care that is coming up. When it comes to other categories like oral and diabetics the oral anti-diabetics as a category is really growing well. One is many of the products have gone off patent or many of the critical molecules have gone off patent and the branded generics are really affordable.
So a good amount of switches happening to these products which have gone off patent and also there are certain therapies like semaglutide which is the anti-obesity drug which comes in the anti-diabetic category which is picking up well not just because of its higher value but in terms of units also the consumption is relatively better. So this is one category which is picked up really well. Anti-asthma, arthritis these are also the categories which are very strong category and which indicate many things within the country for example anti-asthma or anti-allergics category growing indicates deteriorating air conditions or you know air quality index.
If you keep on reading nowadays there are a lot of comments on air quality index in certain cities certain states having gone down or you know it has gone down further. So that is again indicated in the increase in consumption of anti-asthma products, COPD products or anti-allergic products. So there is a complete reflection of how the health parameters and the atmosphere parameters are fluctuating in the country and how the consumption of different drugs is happening in the country.
Govindraj Ethiraj: Sheetal, thank you so much for joining me.
Sheetal Sapale: Thank you so much.
