Indian Markets Hit Their Highest Levels In 2025
The big global news is hopes of a de-escalation in the US-China trade war
On Episode 564 of The Core Report, financial journalist Govindraj Ethiraj talks to Rahul Jain, Director of Research at Dolat Capital.
SHOW NOTES
(00:00) The Take
(06:26) Indian markets hit their highest levels in 2025
(08:57) The rupee takes a mild hit after the dollar strengthens
(11:41) The US blinks again on tariffs, markets look up
(13:49) Understanding the outlook for IT stocks in a time of volatility
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].
—
Good morning, it's Thursday, the 24th of April, and this is Govindraj Ethiraj, headquartered in Broadcasting and Streaming from a warm Mumbai, India's financial capital,
The Take
Tesla's share price is down 41% this year, its revenue down 9%, and profits fell 71% in the first quarter of the year. Its year-on-year automotive revenue is down 20%.
It is getting pummeled by Chinese electric vehicle giant BYD, in China, of course, and elsewhere in the world, for reasons to do with its own brand and the shifting sands in the EV market. Another fun fact, Tesla has lost all its Trump bump gains. It was quoted around $237.
As of Wednesday, around the levels, it was around November 4th, 2024. On December 17th, the Tesla stock price had peaked at about $479. In the middle of all of this, its chief financial officer or CFO, Vaibhav Taneja, originally a chartered accountant from India, when asked in an earnings call on Tuesday, said that Tesla sees India's 100% tariffs on cars, that's import tariffs, making customers anxious.
He also said Tesla is still assessing when to enter this very hot market, even as those concerns linger. He said the same car which it is sending is 100% more expensive than what it is, and that creates anxiety. And that's why Tesla has been very careful, trying to figure out what's the right time or when is the right time to enter India, he said in that earnings call reported by Reuters.
But he also added that India is also a very hard market. So it's hot and hard and a great market to enter, thanks to its big middle class. That's the Tesla point of view.
The 100% duty is of course true, that same formula applies. But that same formula also applies to carmakers, several carmakers, actually, including the big German ones who import some of their cars, lock in stock as it happens, and thus pay 100% duty or more than that. Now, those are of course in the premium range and not in the mid range that Tesla possibly wants to compete in at around 30 lakh rupees or less, which is not a large market in any case.
Chinese Tesla beta BYD meanwhile has four models in India starting at about 25 lakh rupees and going up to 49 lakh rupees. BYD has been in India since 2007 with manufacturing plants for various components including batteries in Chennai and brought in its first electric buses in 2013 and cars in 2021. Last month BYD said it had developed a technology that could offer around 400 kilometres of range on its cars with just five minutes of charging.
Around that time it could potentially take you to fill up a gas tank. Meanwhile, CATL, the world's largest supplier of EV batteries and also a Chinese company said on Monday, its latest battery could provide 520 kilometres of driving range in the same five minutes of charging time. Tesla's latest superchargers, by the way, can add up to 270 kilometres, that's about half of that in 15 minutes, according to some reports.
So the latest battery technology from BYD is not yet in India, though its cars are of course here, but Tesla, as we know, is not here as yet. India is openly wary of BYD's investments into India or at least further investments for larger security reasons, but is openly welcoming Tesla as we know. And yet Tesla is dragging its feet while BYD is grabbing every opportunity possible and wants to invest in India, if only allowed to.
And clearly Tesla seems to be lagging in the most critical aspect of the EV technology battle, at least from the consumer's viewpoint, distance that can be travelled on a full charge and the time that is taken to charge. Meanwhile, Tesla's sustained hesitation to enter India or its evident attempt to wait it out for duties to fall, runs somewhat contrary to how any company would approach a hot market. To be fair, Tesla has finalised modest showroom space in Delhi and Mumbai and posted for more than 2,000 jobs or about 24 jobs, according to Reuters.
Now, the Teslas that could be sold here would likely come from Germany at a shipment value of around $46,000 going by Reuters report quoting the import of one such model. That's almost 40 lakh rupees landed. Now, Tesla lovers will go for it at that price.
And at least the Ford owners I know world over personally love their Teslas, even if they may not pay that price for it here in India. Meanwhile, Indian manufacturers are pushing back at any possible move by the government to appease Tesla, including companies like Tata Motors and Mahindra who've been sweating it out in the electric vehicle market in recent years and innovating to their credit at the same time. The government has proposed a new policy that could see EV tariffs fall, that's import tariffs from about 70% to 15% for firms that have a clear intent of localising manufacturing in the country.
Tesla's CEO and India's Prime Minister Narendra Modi spoke to each other last week and posted the fact that they did so on social media for all to All of this has still not changed Tesla's surprising sluggishness in entering India, considered by most if not all global auto giants as a strong, long term, middle class India market. And then there is the larger tariff war everyone is consumed in, into which India has not waded into and quite thankfully so. Now, tariffs are a good reason to consider how to calibrate entry into a market like India, but it should not be the only reason to not enter or delay entry for that reason.
At least that's not how other global auto giants have moved when it comes to an India market strategy. Reports also suggest that Musk's focus is now self-driving cars and the humanoid robots called Optimus, which could launch this year. Cynics also point out that Musk is losing interest in cars, at least the plain vanilla electric ones.
It is now focused on robots and robot taxis because that's where the future valuation lies. Well, here is some news. China is catching up quite rapidly on humanoid robots too.
You can see they're dancing once on the internet. And just last week, some 20 humanoid robots ran a half marathon in Beijing alongside thousands of human runners. In any case, a labour surplus market like India is hardly looking for humanoid robots unless it's for strictly industrial applications.
On self-driving cars, well, that's the least of India's priorities right now.
And that brings us to the top stories and themes.
Indian markets hit their highest levels in 2025 as the stock markets stay firm.
The US blinks again on tariffs and the stock markets and bond markets look up.
The rupee takes a mild hit after the dollar strengthens. Crude oil prices soften.
And understanding the outlook for IT stocks in a time of volatility.
It's The Seventh Straight Day Now
The stock markets continue to soar today for the seventh straight day. The big global news is, of course, that there are hopes of a de-escalation in the US-China trade war and more on that coming shortly. Apart from the fact that Trump has said he has no plans to fire the chief of America's central bank, that's the Federal Reserve.
So the markets are taking short breaths and Wall Street jumped overnight on these developments. Back in India, these international developments were one input, but not the only one as domestic factors ranging from easing inflation to good monsoon projections to, of course, capital flows moving back into India, that's from foreign portfolio investors, are keeping sentiment strong. IT stocks did particularly well and more on that shortly.
The sensex went back and forth like many other days, except that the undercurrent kept it up and ahead. It closed the day with a gain of 521 points at 80,116, so it crossed the 80,000 mark, closing also at a 2025 high. The sensex has now risen 8.5% or 6,269 points in the last seven days. The nifty was up 162 points higher at 24,329 and has also rallied about 8.5%, 8.6% to be precise, or 1,930 points in the last seven trading sessions. Foreign portfolio investors have brought in about $2 billion in the last five trading sessions. HCA Technologies jumped about 8% its best ever single day gains in September 2019, thanks to an 8% rise in net profits and a 6% growth in revenue according to Business Standard, which also reported that Tech Mahindra, Infosys and TCS stocks also rose today with Tech Mahindra and Infosys more sharply.
The BSE mid-cap index was up about 1%, the small cap much lower at barely 0.2%, but the overall market breadth was positive. Wall Street opened firm on Wednesday morning, thanks to all of that news from the US, with the Dow Jones jumping about 1,000 points in morning trade. The Wall Street Journal reported and cited a White House official saying that the administration was considering reducing China tariffs to between 50 and 60%, 65 actually, and the report obviously sent the US indices to session highs according to CNBC.
A White House official later told CNBC that such a move would of course have to be bilateral, however, with China lowering trade barriers as well. One of the most interesting and perhaps visually graphic exchanges in the trade war was when China sent back two Boeing aircraft over the weekend and these actually had the liveries of the Chinese airline painted on them and they were sent back from China back to the Boeing headquarters in Seattle.
The Rupee Softens
The rupee took a hit on Wednesday after the US dollar index recovered thanks to an overall recovery in the US markets. The rupee saw its steepest fall in two weeks, ending about 0.3% down at Rs. 85.42 against Rs. 85.18 at the previous lows according to Reuters. The rupee has struggled to rise above 85 per dollar this week, which has led rupee bulls to close their long-term positions on the rupee, two traders told Reuters. So most Asian currencies have declined following the dollar index's 1.5% jump on Tuesday after Trump assured markets he had no plans to dismiss Federal Reserve Chair Jerome Powell. The other factor that helped the markets and the dollar was US Treasury Secretary Scott Besant expressed optimism about a de-escalation in US-China trade tensions and more on that shortly. ING Bank said in a note quoted by Reuters that we could witness a period where the dollar is tossed around by headlines of Fed independence risk and market-friendly news on US tariff policy, but the balance of risks remains skewed to the downside for the dollar in the near term. Elsewhere, oil prices fell slightly about a percent on Wednesday after Kazakhstan struck a defiant note about its rising oil output, according to Reuters.
Brent futures were down to about $66.80 under $67 during the day on Wednesday. Meanwhile, gold prices are still high. India's largest dweller Tanishq Paratitan is now expanding its 18-carat gold offerings, particularly for the crucial wedding market, according to a report in the Mint newspaper.
The head of his jewellery division, Titan's jewellery division, told Mint that going forward, 18-carat could become a way of life not just for us, the industry will also move in that direction because customer budgets are not infinitely extendable. This also signals a shift in preferences amidst, of course, budget pressures, because remember, there are two kinds of buyers. One is investment buyers who are buying gold as an asset for appreciation.
The other is buying jewellery for weddings and other occasions. On Tuesday, as we know, gold hit that psychological mark of one lakh rupees per 10 grams ahead of Akshay Trithya, the auspicious day for purchasing gold. And that's something that people are watching out for just to see whether demand will score over the current price levels or not.
Mint also pointed out that Tanishq, which has about 500 stores across the country, feels that its 18-carat jewellery contribution is still low and in the low single digits. It anticipates significant growth in this segment, though it already sells 18-carat pieces for both modern and everyday designs. Most Indian families, when they buy gold, usually buy 22-carat gold for wedding, with 18-carat being less popular, says that report.
And The Latest In The Tariff Drama
The Wall Street Journal is reporting that discussions are going on within the White House to bring down tariffs on China sharply. Meanwhile, President Donald Trump has said he plans to be very nice to China in any trade talks and that tariffs will drop if the two countries can reach a deal. It will come down substantially, but it won't be zero, he said on Tuesday in Washington.
And this followed comments from Treasury Secretary Scott Besant, who said that the standoff was unsustainable, according to Bloomberg reports. Trump also added that the U.S. was going to be and China was going to be very nice and we'll see what happens. Trump also said he didn't see the need to play hardball with Chinese leader Xi Jinping and that during discussions he wouldn't raise COVID-19, an issue that is politically sensitive in Beijing.
The White House had recently launched a website that suggested the virus came from a lab in China, which obviously upset diplomats there. A foreign ministry spokesperson said that the door for talks is wide open at a press briefing in Beijing on Wednesday, reiterating that trade wars don't have any winners, according to Bloomberg. And apparently while Trump has repeatedly sought to get Xi Jinping on the phone, China wants the two sides to work out the contours of an agreement before the leaders speak, according to Bloomberg once again.
The 145% duties Trump has placed on Chinese shipments this year remains in place, though he has made exceptions for computers and popular consumer electronics, mostly or to a large extent benefiting companies like Apple. Bloomberg says that Xi has still not spoken to Trump since his U.S. counterpart returned to office with no public indication that talks between the two countries are taking place even at lower levels. China has instead been intensifying its outreach to other countries, even warning them not to strike trade deals with the U.S. that hurt its interests. Foreign Minister Wang Yi told his counterparts, according to Bloomberg, that is in the U.K. and Austria that China stands towards the U.S. aims not only at safeguarding its own interests but protecting international rules and multinational trade systems. China also wrote a letter to Japanese Prime Minister Shigeru Ishiba this week calling for a coordinated response to Trump's tariffs.
Where Are The Stocks Going?
On Wednesday, the Indian stock markets hit their highest levels in 2025, as we just told you, thanks to a rally in information technology stocks after HCL Tech's strong forecast and hopes of the de-escalation in the U.S.-China trade war, which could mean that the economy would be stronger in the U.S., which could mean that companies will spend and spend more on IT that could benefit Indian IT companies. So that's the thought process.
HCL Tech jumped about 7.5%, the most on the Nifty 50, as it provided a full-year revenue forecast, which outpaced analyst expectations and the outlook from its peers, Reuters reported. Also adding that the IT index jumped about 4.3%, that was the best day in nine months, thanks to all of those forecasts, which have been, of course, weighing on prospects for IT companies. So IT stocks are looking up once again, at least for now, after being shunned somewhat in recent months and of course even years.
Is this temporary or not? And what is the longer-term view on IT companies? And what is the growth potential, at least as viewed by analysts who are tracking this sector closely?
I reached out to Rahul Jain, Director of Research at Mumbai-based Dolat Capital Market, an IT sector analyst, and I began by asking him how he was reading the latest clutch of results by the top IT companies, and what were the questions that he still had for them, or which he was waiting for answers.
INTERVIEW TRANSCRIPT
Rahul Jain: As you said, there is a mixed thought process, because given the macro changes that were taking shape, these stocks took a beating first, and so that in turn kind of toned down the expectation that one was perceiving in their earnings. So the mindset itself was accepting a much lower growth than what one was thinking, let's say, just 4-5 months back. And to that number, of course, numbers are either slight miss or in line, but of course, what we were thinking a few months ago, they are much lower there.
Govindraj Ethiraj: If you were to now look at some of the big companies, whether it's TCS, HCL, Wipro, and others which will come, what are you seeing within those numbers and between the way those results are emerging?
Rahul Jain: Yeah, I think one thing is sure that the commentary is more conservative than the impact, at least at this point, because of the lot of noise which hampers the sentiment first, and business probably at a later point. I am rather hopeful, given the guidance that has come up, that either they will achieve this guidance or they may potentially surpass this number. So the good thing is that expectations have been set lower, which makes you feel like things are turning, things could turn better from here.
And it's like earlier when IT has not done so well, so expecting a modest growth would not be such a difficult task. Of course, this assumes there's no major dramatic impact that we might see on the macro front after a 90-day pause. If that goes back in the circle, then of course the view will take a hit.
Govindraj Ethiraj: And how are you seeing the changes that are taking place within companies because of AI and basically technology and the way it's maybe changing the structure of workforce, the structure of response, or the nature of response?
Rahul Jain: Historically, we have seen that these companies are not the first in terms of getting into the newer trend. But at this point, it's more about how many resources they have and stuff like that. But at a later point, we would see those investments in the training culminating into revenue growth.
But it is very difficult to highlight that company A is doing better than company B. But the usual champions are similar in the tier one pack, which is HCL and PTCS, while TechM and Wipro continue to remain weaker on a relative basis.
Govindraj Ethiraj: What are the two or three main questions that you are asking management, Rahul, when you talk to them right now?
Rahul Jain: Yeah, I think one question which remained unanswered for me for the last couple of quarters, and that I try to ask everyone is that, you know, why for the last two years, Indian IT services are growing slower than global IT spend? There's no great answer I've received so far. So that is one question I would continue to chase.
Even if you look at the current year, the IT services forecast for Gartner is upwards of 7%, while the guidance that we are seeing says that it looks like we will do 3% or 4% for this year. So it's a very difficult to understand question that something that has not happened in the last 20 years, was happening for the last two years and looks like it could be this year as well. So this is one question which I want to answer.
Govindraj Ethiraj: If you look at stock prices now in the current flavour, maybe it's just this week or so on, but you know, there is a shift towards, let's say, financials, consumer staples, because these are all seen as more protected in a tariff war. How do you feel IT stocks will fare or could fare and where would people slot them in terms of riskiness in coming days or weeks?
Rahul Jain: I think at least this part is very well captured in the current validation because for a very low growth, the large cap is now trading 20 to 22 times. I think this is where it should get bottomed out. What we might have to wait for is a trigger for an upside.
So the downside is, as I could say, of the risk is what I would say behind us. The upside trigger is something which could happen in three months, six months, maybe a year later. It all depends upon how the macro shifts up, but yeah, valuation definitely is in the bottom zone, I would say.
I mean, we reached 4-5% dividend yield, so I think that's a good benchmark to look at whenever things start to bottom out.
Govindraj Ethiraj: Last question. So we've talked about the big companies. How are you seeing the second-rung or second-tier companies, which are smaller and maybe growing faster?
Rahul Jain: Yeah, they have shown a much better resilience and their growth has been more skewed to fewer clients given their size. And of course, that's a double-edged sword. I think so far the mid-cap have continued to perform better on a five-year basis versus the large cap.
I don't see that to be any different. But as we enter into the next five-year phase and when some of the newer technology will take a bigger piece of the incremental revenue, I think that will become a difficult period for some of the smaller names. But as far as the mid-caps are concerned, I think they should continue to do well.
Small caps might need to be realigned at some point.
Govindraj Ethiraj: Rahul, thank you so much for joining me.
Rahul Jain: Thank you for having me.
