Markets Build On Its Relief Rally
India's major indices clocked their best day in a month and a half on Tuesday, closing near one-month highs, as investors betted on the bottom being close
On Episode 534 of The Core Report, financial journalist Govindraj Ethiraj talks to Ambareesh Baliga, Veteran Market Expert as well as Safi Ahsan Rizvi, Advisor at the National Disaster Management Authority (NDMA).
SHOW NOTES
(00:00) Stories of the Day
(01:09) Markets build on its relief rally as bottom fishing kicks off
(02:36) Julius Baier downgrades US equities, eyes China & India stocks
(10:24) British bank Barclays infuses Rs 2,300 crore into Indian arm in bid to expand play
(12:02) China blasts Li Ka Shing conglomerate for “spineless groveling” to US pressure and agreeing to sell Panama Canal to US, among 43 ports
(13:43) A Chinese car battery that can be charged in 5 minutes to drive 400 km could be a game changer
(16:30) How is India preparing for heat waves for lives and livelihoods
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 Wednesday, the 19th of March, and this is Govind Rajyathiraj at Quadrant Broadcasting as well as streaming from Mumbai, India's financial capital, and our top stories and themes.
The stock markets build on a relief rally as bottom fishing kicks off.
Investment bank Julius Bear downgrades U.S. equities and eyes China and India stocks.
British bank Barclays infuses 2,300 crore rupees into its India arm in an effort to expand its
China blasts Li Ka-shing conglomerate for spineless grovelling to U.S. pressure in agreeing to sell the Panama Canal to the U.S. amongst 43 ports.
How is India preparing for heatwaves for lives and livelihoods?
And a Chinese car battery that can be charged in five minutes to drive 400 kilometres could be a game-changer.
The Stock Markets Have A Good Day
India's major indices clocked their best day in on Tuesday, closing near one-month highs as investors betted on the bottom being closed. The Nifty 50, which has fallen for five months in a row starting in October, which is its longest monthly losing streak in almost 30 years, is now up 3.2% in March. So far, trimming losses since late September to 13.1% from 16.4% from the peak, according to data put together by Reuters. Earlier in the day, that's on Tuesday, Asia-Pacific markets also powered ahead, taking up from Wall Street, which was up after U.S. retail sales data appeared to ease recession concerns. Hong Kong's Hang Seng Index led the gains in Asia, rising about 2.3% in its last hour, and the BSE Sensex, of course, followed. The Sensex and the NSE Nifty 50 rose for the second consecutive session as bulls seem to be in control, having pushed back at least for now.
Foreign institutional investors have sold over $16 billion this year, somewhat incessantly, but also appear to be slowing down now. The 30-share Sensex on Tuesday closed at about 75,301, that's up 1,131 points, or 1.5%. The NSE Nifty 50 was up 325 points to close at about 22,834. The broader indices were up, too.
The Nifty small cap was up 2.7%, and the Nifty mid cap was up 2.1%. Flows are still shifting globally, and it could, of course, be interesting to see how the next few months pan out and more on that shortly. Interestingly, Swiss investment bank Julius Baer has downgraded its longstanding constructive stance on US equities and is now looking out for opportunities in other markets, according to CNBC. In Asia, Julius Baer analysts said that they were overweight on Chinese equities, which are in a cyclical bull market, and Indian names, which provide long-term structural growth exposure.
The head of equities strategy research at Julius Baer wrote in a note that with US equities in oversold territory and a short-term counter-trend bounce likely, they see it as an opportunity to further diversify into non-US markets in coming weeks. They also expect the rotation into non-US equities to persist in the case of a moderate slowdown in the US economy. However, they said a recession in the world's largest economy, which is the United States, is likely to also trigger a broader bear market globally, according to that CNBC report.
So, let's come back home to get a sense on how the markets are stacking up right now, including picking up from that 1100 point rise, and what we could take away and importantly not take away from the action in the last few days or a couple of weeks. I reached out to veteran market analyst Ambarish Baliga and asked him exactly that question.
INTERVIEW TRANSCRIPT
Ambareesh Baliga: So, see basically what's happened in the last couple of weeks was a very decent sort of a correction, which in fact we were waiting for a long time, it was not happening. Finally, we've seen that major correction coming. So, what has happened is it's hurt a lot of retail investors who are so used to markets moving in one direction.
Whenever there are corrections, they used to buy in. And the theory at that part of time was buy on a correction, you'll never make a loss. And it's quite easy making money in this market.
I think all that was thrown out the window in the last couple of months and especially the last couple of weeks. So, as of now, I think the retail investors are completely bruised. As investors, as long-term investors, I think after a long time, it has given us an opportunity to pick and choose.
Valuations, I wouldn't say are mouthwatering, but at least valuations have come to decent levels. And the best part now is that the analysts and smart investors, the expectations from earnings were decently high if you look at FI24 and part of FI25. Now, I think the expectations have been watered down.
So, going ahead, at least the disappointments from the corporates may not be as high as what we saw in the recent past. If you talk of the macro numbers, I mean, they are still mixed, I would say. We are yet to see an uptick.
And what's happening in US, President Trump, is something which we don't know as to what he's going to announce tomorrow. I think we need to wait for April 2nd to see as to what really happens to tariffs on India. Although people in the market are expecting that it could get postponed, it could get diluted.
But then those are just expectations, we don't know what's going to happen. This sort of a rally which we have seen, I think it's more of a relief rally, because after a huge correction, there has been some value buying. So, now we are seeing some short covering.
So, possibly, we could see this rally continuing for a while longer. I'm decently sure that this is not a fresh bull run.
Govindraj Ethiraj: And I'll come to your strategy in a moment. So, you're saying, therefore, that one thing that's clear, or it seems to be clear is institutional investors are not expecting a big turnaround in corporate performance in the next quarter, or maybe even a couple of quarters, or at least they've tempered their expectations. They have tempered their expectations.
I think that's the only positive.
Ambareesh Baliga: See, I mean, corporate earnings cannot really move up overnight. Because we have seen a decent amount of slowdown. And we'll never see a V-shaped recovery, looking at the way things are.
But like I said, the only positive thing is that since expectations have been tapered down, and market is all about expectation and delivery. So, when the expectations have been tapered down, the delivery is not too bad, then people take it positively. So, one can say that possibly, we are seeing some sort of a bottom.
Although you can never call a bottom till it's made a bottom and it's moved up at least 8-10% from there. We've not seen that as of now. But I would hazard a guess that yes, we are seeing some sort of a bottom.
Govindraj Ethiraj: And your own strategy, and I know that you were very high on cash last year. So, how have you approached this market?
Ambareesh Baliga: It was tough sitting on cash, especially when you see the market setting new highs. And those 3-4 months from June-July to September-October was a bit difficult. But yes, I think that's paid off quite well because...
Govindraj Ethiraj: You were at about 40% cash at that time?
Ambareesh Baliga: Yeah, we are about 40% in cash. But we have invested a decent amount in the last couple of weeks. And today, we are down to 10%.
We're keeping this 10% cash for eventuality. Because although I'm expecting that the market should not really break that 21,800-22,000 band, but you can't be sure in the market. So, anything can happen.
So, in case we see a breakdown below that, we'll possibly utilise this 10% cash. Or if I see a breakout beyond 24,000, which again, I don't expect to happen soon. But in case that happens, I'll invest the balanced cash at that point of time.
Because by then, if it has to break 24,000, then there has to be a good reason for it to break 24,000.
Govindraj Ethiraj: And how are you seeing foreign portfolio investor sentiment and action right now, given that their selling is really what has driven the market down to a large extent?
Ambareesh Baliga: Yeah, I think that's going to continue at least for a while longer. But then I would again hazard a guess and say that possibly we are close to end of FIS selling. Basically, because their holding in Indian companies, I think is at a decade low or maybe more than that.
One of the reasons for major amount of selling in the recent past was, one was clearly the valuation, valuations were high. The rupee had suddenly become weak. I think that is what forced them to sell because there is a double whammy.
I mean, you have markets coming down at the same time the rupee is getting weak. So, I think there was a rush to the exit gate that became a stampede. But if we see the rupee stabilising wherever, whether it's 86.5 or 87 or 88, it has to stabilise. So, when it stabilises and slowly you start seeing the macro numbers improving, you see the corporate earnings meeting expectations better than expectations, hopefully which should happen in the next two to three quarters. I think that's the time these FIS will again come back. Because end of the day, they have to invest in markets which are expected to perform better than the rest.
And from here on, at least if you're talking of slightly longer term, I don't think there's any doubt that India will not perform. So, India will be performing better than most of the other economies. So, money like liquid flows in wherever the economies are doing better.
Govindraj Ethiraj: Ambreesh, thank you so much for joining me.
Ambareesh Baliga: Thank you. Thank you. Always a pleasure.
The Rupee Stays Strong
Good news for the rupee, at least for importers. The Indian rupee jumped to its highest level in over three weeks on Tuesday, thanks to likely dollar inflows and persistent weakness in the US dollar, which is now near a five-month low against major peer currencies, according to Reuters, which added that the rupee rose to its peak of Rs. 86.54 against the US dollar, its highest since February 21st, before closing at Rs. 86.57. At least three large foreign banks sold dollars, helping lift the rupee. A trader at a bank told Reuters and bids by state-run banks, however, kept a lid on further gains, according to them.
Barclays Steps Up
British lender Barclays, who has been active in India in various shapes, sizes and forms for over 35 years, on Tuesday announced a Rs. 2,300 crore capital infusion into its India operations. It called it a reaffirmation of its long-term commitments to one of the world's fastest growing economies, and said that this capital injection will strengthen the bank's balance sheet and help grow its businesses across the investment bank and the private bank, enabling it to expand its reach to a wider client base across corporate and financial sponsor clients and ultra-high-net-worth individuals in India, which is a market that most private banks globally are chasing.
Barclays earlier invested about Rs. 3,000 crores in 2021, and its total investment in India will increase to over Rs. 12,400 crores, as part of its steady and sustained growth strategy, according to Barclays.
Its Head of Markets for Asia-Pacific and Country Chief Executive said that India's economic potential continues to present attractive opportunities for Barclays to grow its business.
Oil Prices Inch Up
Oil prices rose slightly on Tuesday to their highest level since the beginning of the month, even as tensions rose again in the Middle East, and China is pushing more economic stimulus packages. Brent futures were up about $0.84 to $71.91, so just under $72 a barrel. On Tuesday, President Donald Trump had said that the U.S. assault on Yemen's Houthis would continue unless they end their attacks on ships in the Red Sea.
China Hits Back At Port Sale
China has expressed displeasure over Hong Kong tycoon Li Ka-shing's deal to sell 43 ports to a consortium led by U.S. headquartered and based BlackRock, in a deal that President Donald Trump touted as the U.S. reclaiming the Panama Canal. The Panama Canal is part of these 43 ports, and Li Ka-shing's CK Hutchison company is set to receive about $19 billion for selling those ports.
Bloomberg reported that the Hong Kong and Macau Affairs Office reposted successive commentaries published in the pro-Beijing Ta Kung Pao newspaper last week, blasting Li's conglomerate for what it called spineless grovelling to U.S. pressure. Bloomberg is now reporting that Chinese authorities have begun looking into CK Hutchison Holdings' sale of its overseas port businesses, amid signs that China is unhappy that the Hong Kong conglomerate divested its Panama operations under U.S. pressure. Bloomberg said that several Chinese agencies, including the State Administration of Market Regulation, or SAMR, have been instructed by senior state leaders to study the deal for any potential security breaches or antitrust violations.
Beijing's examination of that deal doesn't necessarily mean that any action will be taken subsequently, and however, deals of this size often attract regulatory attention. CK Hutchison's shares fell by almost 5% on Tuesday. Bloomberg said that investors had hailed the surprise port sale as a lucrative exit for Hong Kong's second-richest man from a business that faced growing political scrutiny and trade barriers, including Trump's threats and desire to reclaim Panama Canal, as he called it.
Is this an electric vehicle game-changer?
Chinese car giant BYD Company shares jumped to a record after it unveiled a lineup of electric vehicles that say can charge almost as fast as it takes to refuel a regular car, according to Bloomberg. The stock climbed as much as 6% at the open of trading in Hong Kong on Tuesday, taking its market value to almost $162 billion, which is more than four General Motors and Volkswagen combined. BYD's new battery and charging system was capable of providing about 400 kilometres of range in just five minutes of charge in tests, according to its chairman and founder, who spoke on Monday.
BYD will start selling vehicles with this new technology next month. BYD cars, by the way, are also visible and available in and on Indian roads. BYD unveiled new Super e-Platform technology, which it says will be capable of peak charging speeds of 1,000 kilowatts.
CNBC said that they could not independently verify these claims. By contrast, Tesla's latest superchargers offer a charging rate of up to 500 kilowatts and can add up to 270 kilometres of range in 15 minutes. The Mercedes-Benz Group last week said its all-electric CLA will be able to charge up to 325 kilometres within 10 minutes, said Bloomberg.
The ultimate solution, according to BYD's founder, is to make charging as quick as refuelling a gasoline car. Analysts described the technological advancements of BYD's new platform as out-of-this-world and a heartbreaking development for its foreign competitors. One analyst said that just when everybody's focus seems to be turning towards smartification, BYD comes right back and says, no, no, no, we're not done with electrification as yet.
India's Exports Are Down
India's merchandise exports fell for the fourth month by about 11 percent to $36.9 billion in February from about $41.4 billion a year ago after a 2.4 percent decline in January. This is the sharpest contraction in trade in 20 months thanks to a broad-based decline in exports of crude oil, core, and gems and jewellery, according to rating agency Crisil.
Merchandise imports have fallen, too, by about 16 percent on-year to about $51 billion in February from about $61 billion a year ago. Gems and jewellery is a surprise number, with imports falling about 60 percent year-on-year thanks to a 62 percent drop in gold imports.
Remember, prices are at all-time highs now. All of this led to a merchandise trade deficit narrowing to about $14 billion in February from about $23 billion in Jan at about $19 billion a year ago.
India Gets Set For Heatwaves
India is set for extreme temperatures, as we've been discussing on the core report, which will affect lives and livelihoods in the coming months.
As the country gears up for another scorching summer, the National Disaster Management Authority is planning to come up with 300 heat action plans at the city level, more than what it had originally set out. India's National Disaster Management Authority, or NDMA, defines heatwaves as a period of abnormally high temperatures, more than the normal maximum temperature that occurs during the summer season, in the northwestern parts of India. Heatwaves usually happen between March and June, and in some rare cases, even extend until July.
This year, heatwaves kicked off by February end, with temperatures going above 40 degrees Celsius in states like Jharkhand, Maharashtra, Karnataka, Telangana, West Bengal, and Orissa, and they could continue in these regions this week. The HAP, or the Heat Action Plan, is a framework developed by governments to prepare for and respond to and recover from extreme heat events, aiming to reduce the effects on both public health and infrastructure. These plans include emergency response activities, long-term heat preparedness, and cooling interventions.
I reached out to Safi Ahsan Rizvi, advisor to the National Disaster Management Authority in the Government of India, and an Indian Police Services Officer who has earlier worked with the Ministry of Home Affairs, and whose role includes policy prescriptions for the Government of India on disaster risk reduction and mitigation and preparedness for disasters caused by extreme weather events and geological and seismic activity. I began by asking him how the heat action plans were shaping up.
INTERVIEW TRANSCRIPT
Safi Ahsan Rizvi: So in 2025, their forecast shows that March, and they have a very solid system. They use supercomputers. They have very, very deep level modelling on the basis of which they say this.
And over the years, we've been looking at the performance of their models after the March and May period passes by. So they have been fairly accurate. So they have told us that Central India and Northern India is going to be seriously impacted with heat waves.
Now heat waves can also be 1-1 days, say out of 90 days, you have 15 days of heat waves. It means on 15 specific days, the frequency of 15, there was heat above a certain threshold. However, there are also things called spells, heat spells.
Now heat spells can be that continuously for four days, you have a hot day, which is above the threshold, and also a warm night, which is above the threshold. So both hot days and warm nights continues for four days. Last time we had one spell lasting 19 days.
Now the serious concern is that if we have longer term hot spells in this Central India and Northern India, what exactly is going to be the impact? And impact is basically on four types of things. One is humans, which normally everybody talks about humans, what's going to happen to the humans, but people forget animals.
So a lot of livestock in this country, their 3XR population, and a lot of livestock leads to livelihoods of a lot of people in this country. So what happens to animals, there's an entire ministry, Ministry of Animal Husbandry, that deals with the subject. They've done a lot of work and we keep interacting with them.
That is the second aspect. Third aspect is of crops. Crops, ICAR and the Ministry of Agriculture work.
I've done a lot of work in the past. All our agricultural institutes, which we used to see on Do Darshan, Krishi Darshan, we used to see and hear about, those agricultural institutes have done wonderful work on disease resilient crops, on weather resilient crops. So they've done a good job on that.
That place where we are fairly well protected. And the fourth is infrastructure, like a metro train coming out of a 20 degree tunnel in the middle of Delhi, suddenly into 48 degrees. So what happens to the metal that makes that train?
What happens to the overhead lines? What happens to its communication lines? So these are issues that Indian infrastructure, whether it's a public good or the private good, they've dealt with it superbly well.
In fact, in Europe now, where their tram system shut down at 35 degrees, we have had some queries, I'm not saying many, on how we have dealt with the change from the kind of big changes that we have in Northern India. So that is the structure of the heat thing. And coming to heat action plans, I can tell you this, that about 200 plans have been made.
Now, the big grouse that all of us have with plans is that nobody reads plans. When there is a disaster, people will not read the plan unless it is a short, sweet and a very focused plan. So what we do actually is a plan is not something that you sit and read after the disaster.
Heat is a slow moving disaster. It's not like a glacial lake outburst. It's not like a cyclone.
It's a slow moving disaster. So you know it's coming. So what it does, a plan is that it helps the city's officials.
We don't want outsiders to do it. We want the officials to make that plan for themselves. Outsiders can help them and a non-profit can help.
We can help and SDMA can help. And they can help them design ward level assessments of how much is the heat there. All these ward level calculations can be done based on IMD's existing data.
IMD has outstanding open source data which is available. Any researcher can go there and take it down and analyse it. So ward level through a little bit of local research as well.
So it gives you one, an assessment. Two, it tells you that this is where you will get your early warning. IMD's website.
IMD has very good apps to amplify its message whenever the issue is there. It puts out two or three warnings on a daily basis. So that's a very good place to get your EWS.
You don't have to put in money. Then it tells you how to be prepared. So in your preparedness, what do you do before the heat wave starts?
What do you do when it's about to start? And what do you do while it's happening? On all the four things that I mentioned.
Health, human health, animals, crops, and infrastructure. So each city will have its own story. So that's how the whole structure is done.
Govindraj Ethiraj: As a central government authority that's obviously empowered to work actively in this area. How does that role play out in this period? And when I say this period, I mean obviously in the next few months.
Beyond the plans that you will have.
Safi Ahsan Rizvi: You see NDMA is in a very awkward kind of situation. There are 17 hazards that impact India. In all of the primary hazards that they count 18.
So apart from volcanoes, India has 17 hazards in some corner of the country or in the middle of the country. So we are always occupied with some kind of ongoing slow moving or disaster. Even a chemical factory incident which is of size is a big bother for us.
Because it comes under the CBRN framework. Then your planning also right now what we are doing is in Delhi. We are working with the Delhi government to see on urban floods.
We are working with some 11-12 cities in the country on how to mitigate the impact of urban floods. Which is a very complex story. So on heat what we do is that we do something as boring as issuing an advisory.
However, we push the advisory down to wherever else we can. Down to the state disaster management authorities. Down to the district management authorities.
We just try and spread the message that this is coming. Please do not ignore it. And then very very small things which are easy for people to do.
Like number one for district magistrates. Remind them that shutting schools at the time when you have a peak is a good idea. Or moving dinings is a good idea.
It's left up to them what do they think is the right thing. They do that. Then having ORS solutions ready at every place.
Then getting your hospitals ready and your PHCs ready. Most important are the PHCs. Putting out a little bit of water for the animals and the birds.
Even if they are stray dogs and they are just birds. Because they just start dropping out of the sky. Especially the birds.
So these little little things we put out and we just try and amplify that message. So that is a stage where you can really... This is one thing you can really not prevent.
You can only be prepared for it. So we play a big role in preparedness. Like earthquakes.
The earthquake you cannot prevent. But you can only be prepared. So that in a nutshell is a response to it.
Govindraj Ethiraj: As you look ahead when you look around the world as well. And because these are things that are happening elsewhere too. You know there are wildfires in Australia.
There are forest fires in California. I mean leading to death and destruction as well. So do you see the nature of response changing sufficiently in India?
I mean it's really not just a public sector thing. But it may be a private sector thing. And if it's not and if people are not sufficiently responsive.
Or they either fail to recognise these symptoms. Then what is the next step in a way?
Safi Ahsan Rizvi: I'm so happy that you raised this point. That in India you see we've come a long way. From 1999 in Odisha where we lost 10,000 people in a cyclone.
In a super cyclone. We had one in Gujarat last year. And one in Odisha last year.
There was like zero loss of lives in the Gujarat one. And I think one or two people lost their lives in the Odisha and the West Bengal one. So a lot has been done.
Private sector, public sector, non-profits. Everybody's come together. As you said moving forward.
Forest fires is a very big problem. And it has been recognised. NDRF has been really spruced up.
We have a fire service. A DG in charge of fire service of the government of India level. But the states have their entire forest departments.
Which are geared up fully. Since November they're geared up. Their forest season starts very early.
It starts in December actually. So that is a big problem this year. Because of this one heat.
Especially in central and northern plains. So you're looking at Uttarakhand. You're looking at Himachal.
You're looking at Jammu. Then in the winter of this year. From October to December.
You had about 80% less rain. Absolute levels was less. But you had 80% less than the absolute level also.
So you have a dry forest. You have a pine forest. Which pine needles are very good fuel wood.
So dry forest with fuel. Which is the pine needles. And any spark by mistake.
So it's a serious issue. And these state governments have been spoken to. We have talked to them.
We have held workshops. And state level there have been workshops. To energise people.
To at least get the pine needles removed. Using NGOs and various other people. So dealing with heat.
And then there's another big thing. That is glacial lakes. So glacial lakes.
Glaciers keep melting. So the glacial lake burst. That happened in Sikkim in 2023.
If another one happens. Then your whole valley gets wiped out. So it's all because of heat.
We need the private sector in two ways. One is startups. So India has a very famed startup story.
And it is actually there. However, there's a lot of crowding in areas. Where things have already been built or developed.
Or magnified or amplified. Or put out in newspapers. But what about putting up automated early warning systems.
At 16,000 feet on glacial lakes. It's very difficult to find startups ready to do that. It's very different to find big non-profits in India.
To send their people up there. To Sikkim and to Arunachal and to Mizoram. And say that yes we are going to help you do this.
So we are now. We found one or two non-profits that are happy to do it. So we are trying to push that forward.
So the high hanging fruit. Is where we want to take them. Rather than where the low hanging fruit are.
Govindraj Ethiraj: Right Mr. Rizvi. We've run out of time. Thank you so much for joining me.
Safi Ahsan Rizvi: Thank you. Thank you. It was lovely. Thank you.
