Markets Breakthrough on The 8th Day to End Positive
The bulls gained marginally after a 8-day tug of war with the bears with the markets finally ending in the positive
On Episode 511 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Srivastava, Founder, Global Trade Research Initiative as well as Jaspreet Bindra, Co-Founder and CEO of AI&Beyond.
(00:00) Stories of the Day
(01:00) Markets breakthrough on the 8th day to end positive.
(02:28) Gold prices continue to rise on Trump induced uncertainty
(03:53) India is unveiling massive nuclear power building plans
(05:24) China is wooing its private sector once again to fight the big fight
(06:52) India’s trade deficit rises, what does that mean in the context of tariff wars?
(15:59) India is unveiling AI compute capacity, how will it work?
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 Tuesday, the 18th of February and this is Govind Rajyathiraj headquartered in broadcasting and streaming like always from Mumbai, India's financial capital and the top themes and headlines of the day.
The stock markets finally break through after a vicious bulls versus bears battle for eight days to finally end in the positive.
Gold prices continue to rise on Trump-induced uncertainty.
India is unveiling another round of massive nuclear power building plans.
China is wooing its private sector once again to fight the big fight.
India is unveiling AI compute capacity. How will that work?
And India's trade deficit has risen once again. What does that mean in the context of the upcoming tariff wars?
The Bulls Win For Today
The bulls regained a toe and only as much as a toe after an eight-day tug-of-war with the bears with the markets finally ending in the positive and only marginally or as much as a toe. The BSE Sensex closed up 57 points at 75,996 after a day of wild swings assembling this time an IPL match rather than even a one-day cricket match.
The Sensex recovered close to a 700 points higher from its intraday low of 75,294. Now remember the Sensex has lost almost 2,600 points in the previous 7 sessions or 3.5%. The Nifty 50 meanwhile was up about 30 points at 22,959. The broader markets were also up slightly with the Nifty mid-cap 100 rising about 0.4% or less than 0.5%. The Nifty small-cap 100 index was very marginally up. Meanwhile, Europe stocks just to pick an illustration were up on Monday. The reasoning is interesting because it was aerospace and defence stocks that did well thanks to the uncertainty in the region in one word Russia. Germany's RENK group was up 12%.
Swedish defence manufacturer Saab gained 9%. German arms maker Rheinmetall was up about 6%. Geopolitical tensions between the US and Europe are likely to remain in focus for European markets as US officials are preparing for talks with Russia to end the war in Ukraine with both Ukraine and Europe being left out of those discussions according to CNBC.
Gold Holds
With uncertainty being what it is, including geopolitical not surprisingly, gold continues to advance which it looks like it will do for some time and you can thank the core report for pointing this out for several months now. Or to be fair thank US President Donald Trump who has made it easy to predict unpredictability. Gold is up now after losing some ground on Friday and is trading near $2,900 an ounce and it fell slightly like I said on Friday.
Market participants according to Bloomberg are waiting for more insights on Trump's reciprocal tariff plans which could of course heighten global trade tensions and also make things far more complex than what they are. On the other hand, realisation is dawning among traders that despite all the fear over Trump's moves there is a good chance the tariff threats are being mainly used as a negotiating tool. His administration's trade policies have become increasingly muddled due to delays and exclusions with geopolitical and economic uncertainties tending to add to bullion's haven appeal according to Bloomberg.
Now the other input is of course how the US economy is looking going forward. Latest data showed that retail sales were down the most in nearly two years leading to the outlook that the central bank could cut interest rates by September. Low interest rates are a positive for gold.
And gold despite that fall on Friday has notched its 7th consecutive weekly advance and this is the longest winning streak since 2020 with central banks like China of course continuing to buy.
India's Big Nuclear Plans
India's NTPC is looking to build about 30 gigawatts of nuclear power capacity over the next 20 years, three times more than expected at a cost of about $62 billion according to Reuters. NTPC which originally stood for National Thermal Power Corporation is India's biggest power generator and runs as the name says mostly coal-fired plants and is apparently now looking for land and that's how the story appears to have been triggered.
NTPC was targeting about 10 gigawatts of nuclear capacity but has now tripled the goal after the government this month announced plans to open up the sector to foreign and private investment according to Reuters. Now several governments over the last few decades have tried to or talked about opening up the sector to private investment and that has obviously not worked but there is hope with some more firm announcements including in the recent union budget earlier this month that this could reach fruition. Sources told Reuters that NTPC plans to lead India's nuclear power plant just as it did in the thermal sector and the identified sites are promising and hold potential for large capacity addition.
India is aiming to set up about 500 gigawatts of non-fossil fuel electricity generation capacity by 2030 of which about 100 gigawatts should be nuclear by 2047 according to data compiled by Reuters. Now India's nuclear power capacity presently rests with the Nuclear Power Corporation of India or NPCIL which operates around 9 nuclear power plants with another 4 under construction and this is a sort of monopoly that's been there for many many decades.
China's Xi Reaches Out
When the going gets tough calls in the private sector. Otherwise, let's leave that there we are talking about China today.
Bloomberg is reporting that Chinese President Xi Jinping presided over a meeting with Alibaba co-founder Jack Ma and other prominent entrepreneurs on Monday signalling the government's endorsement for a long marginalized private sector. The business leaders represented industries from chip making and electric vehicles to AI and it also demonstrated China's softer stance towards companies which fuel most of China's economy even as the country gets ready for a major trade war with the United States. Xi delivered a speech after hosting representatives of firms that range from Alibaba, Meituan, Xiaomi and also Deep Seek and Huawei Technologies.
Bloomberg said that Xi shook hands with Unitaries Wang, Ren and Ma, Ma of course being Jack Ma. The President urged the founders and CEOs to maintain their competitive spirit and have confidence in the country's future, emphasising that the challenges they faced were temporary. He also promised to abolish unreasonable fees or fines against private firms and level the competitive playing field, the common complaint of entrepreneurs in China in the state-dominated system, which is obviously an acknowledgement that such unreasonable fees and fines exist to start with.
On Monday, China's parliament also said it would review laws centred on promoting the private economy.
India's Trade Deficit Rises
India has now vowed to buy more industrial goods from the United States days after Prime Minister Narendra Modi's U.S. visit and latest data out on Monday, meanwhile, showed India's merchandise trade deficit at about $23 billion for January, which is in line with expectations, according to a Reuters poll which showed that the January trade deficit will be around $22.3 billion. Merchandise exports in January stood at about $36 billion compared to $38 billion on December 24. Imports were at about $59 billion, while they were $ 59.95 in the previous month. India's Trade Secretary told reporters in Delhi and reported by Reuters that electronics goods are driving exports followed by drugs, pharmaceuticals and rice.
Services exports were estimated at about $38 billion and imports at $18 billion against $32 and $17 respectively in December. India and the United States last week agreed to resolve issues over tariffs, with India promising to buy more U.S. oil, gas and military equipment. The U.S. has also said they will launch reciprocal tariffs with different countries, which means each country will be hit with a different tariff unless negotiated down or out. To get a clear and current sense on where this tariff imbroglio stands right now, I reached out to Ajay Shrivastava, founder of the Global Trade Research Institute or GTRI in New Delhi, and I began by asking him how easy implementing reciprocal trade was going to be and what the downstream effects might be.
INTERVIEW TRANSCRIPT
Ajay Srivastava: On tariffs, it's not clear which part of the tariff they want to focus on. For example, suppose they want to talk at the tariff line level, as you rightly said they have 18,000 tariff lines. So at the tariff line level, I say they export apples to us, we export oranges to them.
And suppose they feel we charge higher tariffs on apples and they will increase tariffs on apples in the US, on Indian apples. So I say, go ahead, please do it. We don't export apples to you.
So this will fail. This will fail in 99% of the lines. So product level will fail.
But in that White House note, they have given the example of Harley Davidson, which is tariff line level, what we are talking about right now. So that is going to fail. And so they may talk about, say, product sector level.
So they say they talk about fruit and nuts together, not the apple and oranges. It's not clear. We are just discussing it right now.
It's not really clear. So suppose they say, OK, Harley Davidson fails, tariff line level fails. So we talk about fruits and nuts, product sector level.
OK, they export apples to us, we export oranges to us. And they say, OK, you are putting tariffs on 50% apples, we'll put 50% oranges because now I am talking about the product sector, fruits and nuts. And if they want to be further unreasonable, they may talk about the entire sector.
For example, we divide the sector into industry and agriculture, two broad heads. In their White House notes, while for industry, they talked about tariff line level, which is Harley Davidson. But in agriculture, they didn't talk about apple oranges.
They talk about the agriculture sector, India charges 39%, the US charges far less. So the rules of the game are not clear. And we should be prepared to fight.
If we don't fight, then they will do whatever they want to do. They even are getting their basic data wrong. In that White House sheet, they mentioned Harley Davidson tariffs.
They mentioned India is charging 100%. For two years, our tariffs are 50%. In this budget, we brought it down to 30%.
And they are mentioning 100% on 30th when we add this tariff of 30%. On the second day, Mr. Trump, during the summit meeting, said the US has a trade deficit of $100 billion. Come on, our deficit is $40 billion.
If they can't get the deficit figures right, we have to fight for it. So I say we need to fight for at least pushing the correct information.
Govindraj Ethiraj: So let me ask what I would call a downstream question. So for example, let's say on imports of bourbon into India, which is like whisky, the duty has come from 150 to 50%. Now, the Indian alcohol manufacturers are saying that we need to reduce local duties on Indian whisky manufacturers so as to levelize.
Otherwise, essentially, you're getting hit by cheap imports and putting local manufacturers to a disadvantage. Now, my question is not necessarily specific to the alcohol industry. But my question is more about how this is likely to play out beyond what we are otherwise used to in terms of, you know, this constant balancing between imports or cheap imports versus local production and local duties.
Ajay Srivastava: So first, I'll correct you, Reda. My understanding is that on all types of whiskeys and wines, our tariffs are 50% basic custom duty plus 100% agriculture and infrastructure development cess. The total is 150%.
We brought down the cess from 100% to 50%. So total import duty is 150% to 100%. So current duty on bourbon is 100% reduced by 50% from 150%.
That's point number one. Second, bourbon import, global imports are less than $3 million in India. From the US, they are less than $1 million.
So it's a non-issue. We have gone ahead. It's fine.
And third, your core question, how the industry should see our import tariff structure needs a lot of changes. GST needs a lot of changes. But these changes should be based on what internally we feel is good for the country for supporting manufacturing, supporting trade and all these things.
It cannot be dictated by the US just because one fine day they come out with this bright idea of reciprocal tariff and they say they will also consider GST. No, no, no, no. We should not do that and no country should do that. But having said that, we all recognise there's a need for internal alignment changes, but it should have nothing to do with the US.
We should not go down to them on this count.
Govindraj Ethiraj: Right. But I think the feeling is that we don't seem to have much of a choice because we also reduce duties in anticipation of our prime minister's visit to the US in the union budget. And we've again indicated after that, that we are open to reducing it apart from maybe promising to what they are going to export to us.
Ajay Srivastava: That was, I think, a signalling. We said we are open to your genuine demands. As a true friend, they are our top partners.
We gave a signal. But there are certain rules in any bilateral negotiations. You know, I have been involved in many of the free trade agreement negotiations when I was in the government.
And if you give something without asking, it will be lapped up and people will not even acknowledge it. So if you're on the negotiating table, let them ask and then we should consider what we can do, what we cannot do. These things for signalling, it's good that we are not very obstinate.
But ultimately, when he's so business minded, we should be talking only at the negotiation table.
Govindraj Ethiraj: Right. So let me ask you a last and slightly broader question then. So as things stand, and we're only talking about the US right now, if we were to reduce duties and if we were to go or rather see more reciprocal tariffs, are we likely to be hit that badly or somewhat or only marginally?
Ajay Srivastava: Govind, nobody knows this today, because as I say, the definition is not clear. If he's going at the tariff line level, like Harley Davidson, we'll not be hit. If he's going at agriculture as one thing, then we'll be hit.
But who knows what is in their mind. They're themselves not clear. And I think now only they may be grappling with the issue.
But there are certain sectors like garments. Garments, we have some tariffs and we can happily cut the tariffs to zero level because garment up to 30-40% cost is labour cost. The US cannot afford to make the garment, they only import garments from around the world.
If we do it zero, our exports to the US will increase tremendously. The US is the top market for garments, Indian garments also. So certain sectors will be gaining at the sector level.
But all these things we can talk about with certainty only when the rules of the games are clear. Right now, they're not clear. He has to define its product level, product sector tariff line level.
Govindraj Ethiraj: Okay, Mr. Srivastava, thank you so much for joining me.
Ajay Srivastava: Thanks, Govind.
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India Goes for an AI Compute Portal
The Indian government is set to launch an India AI compute portal allowing key stakeholders, that's ministries and state governments, to request compute capacity through the platform. As part of this initiative, India AI compute pillar has issued a memo to all union ministries department and chief secretaries detailing subsidised rates for compute capacity network and storage devices according to the business standard. And this is expected to cover approximately 40% of computing costs for eligible users, according to a Hindustan Times report.
And that portal will come in about seven to eight days, the minister told money control. The India AI mission is likely to provide shared computing resources through about 14,000 graphic processing units, following the selection of 10 companies that submitted the lowest bids according to that same Hindustan Times report. Of these 14,000 GPUs are reportedly available through companies like Yota Data, E2E Network, Stata Communications, AWS, which is Amazon Web Services, and about 14,000 are set to be procured with companies like Jio platforms and control less data centres.
About 70% of these GPUs are said to be high end models like the NVIDIA H100, while the remaining 30% consist of lower capacity or older generation. The drive to acquire new GPUs is likely aimed at equipping researchers and startups with the necessary computing power to build foundational AI models which serve as the core of AI powered chatbots like chat GPT and Gemini according to business standard. So what do 14,000 GPUs mean?
And what does GPU mean? Just to get our basics sorted out again, I reached out to Jaspreet Bindra, founder of AI and Beyond in the TechWhisperer UK and also an AI consultant to enterprises and began by asking him to define a GPU.
INTERVIEW TRANSCRIPT
Jaspreet Bindra: We just keep on reading GPU, GPU, and we just assume GPU is this one thing. So look, many of us would have heard of CPUs, central processing units, right? A CPU is what we use for our computers, for our computing power.
And we usually, if you remember when we used to have desktop computers, there was a screen and there was a CPU. So most of the computing, which is simple computing, like what you need to do on a computer or, you know, sequential computing, you could do and still can do with the CPU. And Intel, AMD, etc.
were great at making CPUs. And then, you know, gaming happened. And when gaming happened, the computing powers which were needed were much more than the typical kind of Word document, Excel stuff, etc.
And so a new kind of processing unit started getting made, which, to put it very simply, could perform many operations in parallel rather than sequential. And therefore, with the same amount of hardware, could do much more compute work. And Nvidia was amongst the first of the few people who started building these GPUs.
They weren't called GPUs then, they were only called GPUs later. And a GPU is great for gaming. But people discovered that the GPU and with its compute prowess could be used for other things also, which required brute computing power.
And so, you know, a lot of Bitcoin and Bitcoin mining moved to GPUs. Then Nvidia discovered that it could work brilliantly for AI also, because AI requires far more tasks of a computer than a CPU does. And so a GPU is really a new kind of CPU, which is much more powerful and processes stuff parallelly rather than sequential, to put it very simply.
Govindraj Ethiraj: And when we talk about 14,000 GPUs here, what does this mean in terms of computing power? And what can it be used for? And who could use it?
Jaspreet Bindra: Well, there are GPUs and there are GPUs. Many people make GPUs, but Nvidia is the king of the hill. And it has got two things, which kind of separate it from the rest.
It makes GPUs, which are far, far more powerful, using extremely small chips, which DSMC makes. These GPUs can handle billions of what are called floating point calculations every second. Number two, it also manages the entire software around it, which is called CUDA.
And that's kind of proprietary. It's like having Windows for your CPU. And so given this, Nvidia GPUs, especially the latest ones, which are, I think the H100, are like the Rolls Royce of GPUs.
Each one costs $40,000, $50,000. And the 14,000 GPUs that India has got now, a few of them are H100s. And a few of them are slightly the older version, the older version, which incidentally DeepSeek used to make its model.
And what this means is that now we've got a bank of computing power, or compute as it's called, for all our startups and labs and government research institutions, etc. to kind of use, and something which was not available in India until now.
Govindraj Ethiraj: Right. And how could this then work? So if the government is announcing this as a destination and the computer seems to belong, as one can see, with many private organisations, what is this model going forward?
Or how could it be? And are there similar models elsewhere?
Jaspreet Bindra: So I have written a lot about this. I'm not, if I may say, very confident about this model. Okay.
Actually, when I said that this wasn't available in India right now, I was being a little economical with the truth. So one way to do this is what the government is doing, which is creating this bank of GPUs, which it has kind of imported, put in presumably lower costs, and is going to subsidise and give this off to all these different startups, etc., which would use it. The other is that most times when you want GPU capacity, you can actually rent it from the cloud.
Okay. So all the Microsoft Azure, Google Cloud, AWS, etc., and many others are now literally AI clouds. And you can actually go and rent GPU capacity in terms of how much you want less, etc.
I sometimes think that the cloud model could have been better. Okay. Because it's already available.
It's in India. Most of these clouds already exist in data centres in India. And you can take what you want, not take what you want.
Could have struck a great deal with one or a couple of these guys. Most importantly, look, a new GPU, NVIDIA creates a rhythm where a new next version GPU, next generation GPU comes out literally every year. So by this time next year, or even earlier, the H100s are going to be obsolete in some sense, while the clouds will always be updated.
Right. And so that could have been probably a better strategy. How all of this gets administered, you know, I still need to see the portal front.
Govindraj Ethiraj: Right. And I'm assuming that there are some cost issues as well. So when you go for the top end computing capability or space on AWS, on Amazon Web Services, or Microsoft Azure, then you're paying maybe much more, and maybe in dollars, and maybe it's the other way around when you're doing it domestically.
So in general, do you see that as a way forward, as in will we be able to access high quality compute capacity and capability wherever we want?
Jaspreet Bindra: Well, you know, it's not only cost, it's also sheer availability. There's more demand than supply for these NVIDIA GPUs. Even the big guys like the Microsofts and Googles of the world are not able to get what they want.
In fact, their results, their quarterly results, they've said that their results are lower than expected because they could not fulfil their capacity because they didn't have the compute power. OpenAI is moving away from Microsoft a little bit because it wants compute power. So it's not just cost, it's accessibility.
Two things. One is that, frankly, while we have these 13,000, 14,000 GPUs, if I was to take just one company, Meta, for example, it has close to a million GPUs, 600,000 to a million GPUs. So the capacity is still, for a country like India, still very small.
In terms of cost, the way it will offer at a lower cost to the end customers and users, say startups, et cetera, is that the government is going to actually subsidise the cost. The subsidy could have also been done in the cloud, frankly. And honestly, the people, if you look at Yota, which has got the maximum amount in this whole GPU buy, Yota is nothing but Yota Microsoft Azure.
AWS is with five other vendors. So it's really the same guys, okay, just through a different channel.
Govindraj Ethiraj: All right, Jaspreet, thank you so much for joining me.
Jaspreet Bindra: Thank you.
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That was the Core Report with me, Govindraj Ethiraj. Do stay connected with more of our coverage at The Core. You can check out our website or sign up to our newsletter for our exclusive stories, one in-depth feature a day on www.thecore.in. Do also track us on LinkedIn, where we usually post synopsis or extracts of our top stories and interviews. We would love your feedback on how we can make business more interesting and relevant, including, of course, India's vibrant manufacturing sector.
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