Sensex Hits A 2025 Year High Of 80322
The Indian markets have resumed a forward momentum thanks to the strong undertone
On Episode 568 of The Core Report, financial journalist Govindraj Ethiraj talks to Neil Shah, Vice President Research & Co- Founder at Counterpoint Research.
SHOW NOTES
(00:00) Stories of the Day
(00:50) Sensex hits a 2025 year high of 80322
(02:43) Reliance shares jump as markets rerate stock
(04:21) Gold prices moderate as traders await cues from trade talks
(08:43) Chinese companies are cutting commission deals with Indian exporters for their orders
(19:13) Apple could move a substantial part of iphone production to India. Decoding the move
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 29th of April, and this is Govindraj Ethiraj Headquarter and broadcasting and streaming from Mumbai, India's financial capital. Our top stories and themes.
The Sensex hits a 20-25 year high of 80,322 as the markets remain strong.
Reliance shares jump as the stock markets re-rate the stock.
Gold prices moderate as traders await cues from trade talks.
Chinese companies are cutting commission deals with Indian exporters for their orders.
Apple could move a substantial part of iPhone production to India. What it means.
Stock Markets Remain Firm
The Indian markets have resumed a forward momentum thanks to the strong undertone we've been talking about for a few weeks now. Fears of an immediate retaliation by India following the deadly terrorist attack on Indian tourists in Jammu and Kashmir have eased off for now. The stock markets reversed a two-day losing streak and thanks in many ways to a strong rally in index-heavyweight Reliance industries apart from some banking stocks.
The Sensex hit a fresh calendar year high of 80,322 and finally closed up 1,006 points at 80,218. The NSE Nifty index was up 289 points higher at 24,329. Reliance Industries was the major mover for the indices on Wednesday.
It jumped about 5% to hit a six-month high at 1,367 after it reported better-than-expected fourth-quarter earnings on Friday post-market hours as we also discussed yesterday. Reliance contributed about 400 points to the Sensex gain and added about 100,000 crores in terms of market capitalisation and overall wealth. The other stocks that did well were the banks ICICI, HDFC, Axis and State Bank of India which also pushed up the Sensex.
The top five movers according to business standard contributed about 75% of the day, that's Monday's gain. Foreign investors, as is quite evident now, have turned into net buyers of Indian stocks particularly in April, reversing a sell-off earlier in the month amidst bets that the local market will remain relatively insulated from the impact of US tariffs according to a Bloomberg report which added that global funds bought Indian equities for the seventh straight session through April 24, bringing the month's inflow to $91 million, that's net.
They also bought about 29.5 billion rupees or $345 million of local shares on Friday according to data quoted by Bloomberg. All of this reversed outflows of as much as $3.2 billion earlier in the month. Back to Reliance, analysts are seeing the company's performance as a sign of an overall sentiment boost for the market's incoming days.
The commissioning of the company's first solar panel manufacturing line also boosted sentiment and the transition to a new energy company is starting to bear fruit and it is on the back of earnings growth path according to Morgan Stanley analysts quoted by Bloomberg who also said that they expected a redating to follow this growth. Interestingly, ahead of the results last week, Bloomberg had reported that sell-side analysts were being the most bullish on Reliance since 2008, reflecting optimism for a better outlook ahead of earnings that came on Friday. More than 92% of the 39 brokerages tracked by Bloomberg had a buy recommendation on the shares of Reliance and this was obviously ahead of the results.
And the firms range from Macquarie Group to Kotex Securities and analysts had highlighted the cheap valuation and a potential recovery from disappointing earnings in six of the last seven quarters which seems to have happened for now. Meanwhile, on Wall Street on Monday, stocks were trading slightly higher as investors were watching out for a busy week of corporate earnings and also to see what could happen on the tariff front. The S&P 500 was up slightly while the Nasdaq 100 index was more or less stable.
Treasury Secretary Scott Besant told CNBC in an interview on Monday morning that the Trump administration has had many countries come forward and present some very good proposals. Quite likely India is one of them and it's also likely that India could be one of the first countries to have some form of deal, if not a composite one, then maybe a part one.
Gold prices ease off
Gold prices are easing off a little which is of course good news ahead of Akshaya Trithya, the festival which sees gold buying in India. Gold bullion fell about 1.5% and is down about 6% since hitting $3,500 an ounce last week and that rally had taken it into an overbought territory according to Bloomberg. Also investors are not reacting impulsively to tariff link pronouncements and waiting and watching for signs of progress which of course have not been there. The hope, it appears, is that silence suggests progress which may not be a good strategy but perhaps anything else looks more difficult or challenging to pursue or focus on.
India itself, like I said, is closer to signing a deal either in parts or comprehensively and closer than most other countries. A strategist at Saxo Capital Markets told Bloomberg that while a nervous sense of calm has returned in the global marketplace, the idea that multiple deals could be wrapped up within weeks seems overly optimistic. Bloomberg also says that gold's recent sell-off accelerated as traders bet on signs that its explosive rally may have run too hard and too fast with hedge fund managers cutting their net long US futures and options positions on the metal to the lowest in 14 months which is based off data from the Commodities Futures Trading Commission according to Bloomberg.
However, despite all of this, gold is still up 25% this year. I repeat, 25% thanks of course to all-round buying by consumers including in countries like India, investors and central banks. On Monday, it was hovering around $3,277 per ounce.
Oil Prices Steady
Oil prices are also holding steady for a few days now including on Monday as oil traders were careful weighing the demand and supply equations including the immediate prospect of the Organisation of Petroleum Exporting Countries increasing supply. Brent crude futures were around $66.70 so it's been under $67 for some time now.
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A Quick Recap Of Results
And here is a flavour of some results. TBS Motor Company on Monday reported consolidated net profits at about 648 crores that was up 68% year-on-year. Revenue from operations rose 16%. The company said that overall two-wheeler and three-wheeler sales including exports were up 14%.
For the entire financial year that ended March 31st, TBS reported a 36% jump in net profits while revenue rose about 14%. Ultratech Cement on Monday reported a 10% year-on-year increase in consolidated net profits at about 2,482 crore rupees for the fourth quarter of the last year, according to data compiled by Business Standard. Meanwhile, another Business Standard report said that early bird results for January to March quarter 2025 suggest a slowdown in earnings growth for India Inc.
despite a benign cost environment that has led to an improvement in margins. This is based on an analysis of 175 companies for whom results are in. The combined net profit of those 175 early reporting companies rose by about 3.8% year-on-year and that is the slowest growth in 17 quarters. And net sales grew by 8.5%, slightly better than the 8.1% year-on-year growth rate in Q3 2025, that's the previous quarter, but a sharp decline from the 11% in the March quarter of 2024. Overall, this was the slowest March quarter in revenue growth terms for early bird companies in at least four years, says Business Standard. So a recovery still looks a quarter or two away, but on the other hand, there are more companies to turn in results and next week will be active as well.
The Ultimate Tariff Deals
China-based firms hit hard by US tariffs have connected with Indian exporters to fill orders on their behalf and help them retain their American customers even as they navigate a trade war, which has caused big shifts in global commerce. Of course, all of this is for a commission that Indian firms will have to pay. Bloomberg is reporting in an interesting story that the Canton Fair that runs through May 5th and is on right now in Guangzhou, the world's biggest trade fair, several Indian firms are approached by Chinese companies to supply goods to their US customers.
Chinese exposed to the US are currently faced with 145% tariff Goods going from India are at 10%, which could go back to 26% of the reciprocal tariff threat after that 90-day pause comes through. But at this point, it's 10. It, of course, appears that even if tariffs were to rise, they may not rise much.
It is, of course, not easy for Chinese companies to set up operations in India or ship goods through India to the US. The report says that Indian firms at the Canton Fair were approached to supply goods to US companies under the brand names of Chinese firms or co-branded with Indian firms. Most of the queries came in sectors like hand tools, electronics, and home appliances, according to a top official of the Federation of Indian Export Organisations, adding that there are hopes that some of the US customers may directly start negotiating with Indian suppliers.
So this is an interesting situation indeed. One Jalandhar-based manufacturer of hand tools like drop-forge hammers and cold-stand machines told Bloomberg they're in talks with both China-based American firms and Chinese companies to supply the US markets. They said several companies or four to five companies that approached them, they have a brand name to maintain, so they have to service customers.
I reached out to Ajay Sahai, Director General of the Federation of Indian Export Organisations, and I began by asking him about the nature of these orders and whether this could beat the tariff wall that America had raised against China.
INTERVIEW TRANSCRIPT
Ajay Sahai: In fact, we all know that China is subject to 245% duty for most of the products when they are exporting that to the US. And to that extent, probably the US market is off the radar for all the Chinese companies. In the given situation, two scenarios are emerging.
There are a lot of US sourcing companies in China who either procure the goods and export them to the US. They are now looking into the new opportunity in India. There are a lot of Chinese exporters, Chinese manufacturers, who were so far exporting to the US.
Now with 245% duty, they are totally outpriced in the market. And they are also approaching Indian exporters to export to their buyer as a kind of goodwill gesture to the buyer so that they can retain the buyer when the tariff is off. Probably they can continue with the buyer.
And this kind of request has also come from two sets of exporters in China. One, those who are asking for commission between 3% to 5%. And they are ensuring Indian exporters that US customers will be directly placing the order on the Indian exporters.
And for facilitating the order, they will charge 3% to 5%. But some of them, just with a view to retain their buyer and a goodwill gesture to them, are approaching the Indian company without charging any commission. And they are asking the Indian companies that they will be supplying to their US-based customer as they are unable to supply from China at this given point of time.
Govindraj Ethiraj: Right. And as I understand, many of these queries are in areas like hand tools, home appliances, and electronics.
Ajay Sahai: This is across the sector. But probably we have referred to this sector as I personally visited in Canton, first phase, where it was basically relating to hand tools, electronics, and engineering goods. But the similar trend was also witnessed in phase two, which was for the handicraft and textile sector.
And maybe in phase three, which is continuing. So it is across the sector because China is exporting a lot of products to the US, which are not just confined to electronics and machinery, but also textiles, footwear, furniture, toys, to name a few.
Govindraj Ethiraj: Right. And do you feel that this could encounter some kind of resistance? Because in the past, Trump has clearly said that countries which try to get around this tariff wall...
Ajay Sahai: I don't think it's getting around the tariff wall. It is not that the Chinese goods with some value addition or without value addition are entering the Indian market for exporting to the US. These are entirely Indian-made products which are being exported only then they are being facilitated by someone in China, at times the US company, at times the Chinese exporters.
But I think it's also an opportunity for India. It is not that India is not competing with China even when the tariffs were not so high on China. We are competing with China on a number of products.
This tariff wall has given us, I think, a wonderful opportunity. There were some sectors where we were not competing also. We will be able to take some markets because once you start exporting to a customer and customers start liking your product, customers may not go back to the earlier supplier.
And probably where Indian exporters provide 3-5% commission over a period of time, they can directly discount those much as a part of the commission to the buyer directly and reduce the price for the buyers also. So I personally feel that it's an opportunity. The basic question is that probably the flow of order may be a limitation because creating capacity to cater to what China was exporting to the US from India is a little challenging.
Govindraj Ethiraj: Actually, that was my next question. I mean, how many Indian manufacturers can scale up in any of these areas to the level that China because China typically produces large chunks of global consumption or demand for any of these products.
Ajay Sahai: I think where the US sourcing companies are moving from China to India, they have a long-term perception that probably the relationship between China and US, even if the tariffs are reduced or tariffs are eliminated, will continue to be strained and therefore they are betting on India. Secondly, I think reciprocal tariffs have now given a lesson particularly to the global companies to have manufacturing across the country. China is, of course, off the radar for them.
They are already in Vietnam or the perception is that Chinese goods can find their way from the ASEAN or the Middle East countries will also deter them and therefore they are betting. That's why tariff war is just not an opportunity for India to increase its exports. It's equal an opportunity to attract investment across the sector because A, the long-term growth history of India is intact and B, the global companies are really moving away from China looking at the India though of course in the first tariff war they have gone to Vietnam and other countries.
But now the perception is that either Vietnam will have a similar tariff or Vietnam may have a higher tariff as the reciprocal tariff on Vietnam was much higher. Vietnam also has a limitation to reduce the trade surplus which they have because they are a small economy. India has that advantage . Probably we are moving into that direction.
We are importing more now from the US and probably in times to come we will be importing more. I don't foresee what Mr. Trump has done. It's basically with a view to the fact that India is having a high tariff.
It's basically an issue of the trade surplus.
Govindraj Ethiraj: Right, to come to that now discussions or negotiations are on both sides of working at it. The US Treasury Secretary has said that there are some countries including India that he has hinted at who are ahead in the negotiations right now. What's your sense of where we stand as of now?
Ajay Sahai: In fact, we were the first country who started talks about the VTA even though that had happened before the tariff was started. Our Prime Minister was in a meeting with the US President as early as February when they had taken a call for the VTA by the fall of 2025. And I think the early mover advantage remains with India.
And if you look into some of the US reports which have come when India's delegation was in the US they are pretty encouraging. I'm pretty confident that we will be definitely getting the most benefit of the lower tariff through the VTA though I agree that the entire VTA may not be possible to conclude before the tariff pause period is over but at least as a first tranche we may negotiate on the products so that on the goods sector we continue to enjoy the relief which is currently being available to all the countries till 9th of July.
Govindraj Ethiraj: Right, and you said you were at the Canton Trade Fair which is perhaps the largest of its kind in the world and has been held for many years in China and it's perhaps the most representative trade fair as well. So what was the mood there from the way you saw it?
Ajay Sahai: My observation is that China is slowing down. The global business whisper to China has also declined in this addition and that was quite obvious. China is facing huge challenges with the property prices down and the economy not doing well.
Their growth rate in the first quarter with the front loading of export to the US has been pretty good 4.5% but we feel that China will slow down. The impact of the tariff war will be of course on China though they are putting a very defined stance also but I think with the $500 billion market loss to China they will find it extremely difficult to recover in any other parts of the world and to that extent a strain on the economy will continue.
Govindraj Ethiraj: Right. Dr. Sahai, thank you so much for joining me.
Ajay Sahai: Thank you. Thank you. I appreciate that.
Apple Moving Production To India
Apple could make most of its iPhones sold in the United States in factories in India by the end of next year and is speeding up those plans to navigate potentially higher tariffs in China according to a Reuters report. Apple is holding urgent talks with contract manufacturers like Foxconn and Tata to achieve that goal. Reuters said, adding that Apple sells over 60 million iPhones in the United States annually with roughly 80% of them made in China currently.
The Reuters report said that manufacturing costs in India however are about 5% to 8% higher than in China with the difference rising as much as 10% in some cases. I reached out to Neil Shah, Vice President Research and co-founder of Counterpoint Research and I began by asking him how he was seeing these new potential investments, the competitive advantages for iPhone to bring manufacturing and what were the nuances within that?
INTERVIEW TRANSCRIPT
Neil Shah: Obviously Apple has not officially come out and said that all right it's still an estimate or a grapevine happening good way around in the supply chain but obviously the essence of it is there is a bigger opportunity for India from manufacturing point of view and Apple's diversification strategy of China which we have been talking about for almost couple of years now. So if you look at the overall demand for iPhones in China in the US , almost like 60 to 65 million per year is the market. As you rightly said 20% are coming out of India which has increased over the last two years. Obviously India has more capacity to produce even more because India is also shipping not only to the US but exporting to other countries the iPhones.
So the major suppliers like Foxconn, Tata and then Tata are also taking up Tegatron and Vistron facilities with enough capacity to produce more phones and obviously the new factor is coming up for Foxconn in Karnataka and also for Tata in Tamil Nadu right. So based on that there is enough pipeline being planned anyways for this diversification. The only caveat being until last year most of the phones which were produced in India were the mix of the model it was mostly the N-1, N-2 generation and the base models which were being manufactured right off the bat and those were being mostly shipped.
But starting last year Apple started manufacturing through their partners the Pro and Pro Max models right. I think you reported it if I started manufacturing just after the launch, which usually used to be like a five to six months gap between the Pro, Pro Max and the base. So which is good news however still we don't have enough capacity and expertise to manufacture more advanced iPhones because these iPhones are the pinnacle of iPhone's portfolio and they have more advanced parts and which requires more sophistication in terms of manufacturing those.
Once we build up that capacity and expertise so obviously Foxconn does most of those Pro models right and Tata will build up that capability and capacity moving forward. So once we do that then we are in a good shape to take up as much as production for the US market because the US market is more of a Pro, Pro Max market. Most of the phones majority of the phones are sold there at Pro, Pro Max and obviously there are base versions which are sold for prepaid markets in US and for N-1, N-2 generation prepaid market but the majority is the pushback market and dominated by Verizon, AT&T, T-Mobile and those are all more mature iPhone users which are on Pro, Pro Max and buying the best iPhones out there.
So that is the bottleneck which I see there is enough capacity we can build up in manufacturing and exporting but how to go to the model mix who is going to manufacture that because the biggest caveat also is not just Pro, Pro mix but also the mix of suppliers and the right mix of EMS partners. So if you look in China, Luxair has entered the Apple supply chain in the last few years. Luxair started with Airpods but now it's also manufacturing iPhones right. It has taken a good chunk of share from Vestron, Pegatron and Foxconn and that's why you see Vestron, Pegatron moving out of the Apple supply chain everywhere in iPhones at least.
So Luxair is not coming to India anytime soon right so what happens to that big chunk of phones which are manufactured by Luxair and who does it go to does it go to Foxconn or Tata right and who has the capability capability as well as cost competitiveness to match Luxair which is the Chinese so these are two or three caveats right which ironed out then India can take up most of the US imports coming from India right until then it's going to be our estimate is it was 20% last year this year for the first half it could be close to 30% right because of this tariff situation accelerating a little bit
Govindraj Ethiraj: but that's a big jump
Neil Shah: big jump because of this production which happened in March end right which Apple shipped to US
Govindraj Ethiraj: yeah it was like front-loaded yeah
Neil Shah: but I'm not surprised in a sense where because last year since we have we tracked this very detail right from chip to channel so last year there was few quarters when export contribution to overall iPhone sales or shipments in a particular quarter reached 35% in US so it's not there but all for the full year because the Q4 is a higher holiday season in US and it has more mix of Pro and Pro Max that's why on an average it's 20% for the full year but it doesn't we do have capability to spike to 35% so 30 to 35% ideally should not be a surprise but it's a big jump for sure on an average for a quarter
Govindraj Ethiraj: right so you're saying that while opportunity is there we still have to build at scale the skill sets to produce more iPhone Pros and iPhone Pro Maxes which are mostly being produced in China right now so let me add another question to that Neil so one of the points that was that came up was the cost difference and the fact that it could cost about 10% more to produce in India at this point so how are you seeing costs and the competitive advantage if we were to put the tariff thing aside for a moment
Neil Shah: so from base cost I would say obviously India is quite cost competitive when it comes to labour which is not a new news right so from labour perspective we are cheaper than China the only thing is the overheads right building an ecosystem around it right now everything is all the other different parts are being imported right we don't have a supplier ecosystem around Foxconn or around Tata right we are still getting there Tata is manufacturing some casing right so that can alleviate some cost but there are still many components which are still shipped to India whereas China not everything is shipped to China there is there are a lot of components which are still manufactured in China around the Foxconn factories right and the due diligence which is done from the quality control and everything right and the scale of it which gives them more overall cost competitiveness right obviously eventually we'll reach there at some point when we have that ecosystem which I said is a caveat in the earlier point
Govindraj Ethiraj: today for example if you were to take one iPhone how much of it are we importing today assembling and then re-exporting I know these figures have come out in the past but maybe worth revisiting versus China
Neil Shah: So it's 16 percent of the global production is contributed by India the India value-add is 84 percent so for example total 220 million iPhones are sold a year right so 16 percent of iPhones are produced in India right so producing 16 percent of iPhones in India we are importing most of the parts right the value-add if you talk in terms of value-add to the overall bill of materials of an iPhone that is single digit at this point it's mostly plastic parts casing accessories box cables and so forth the majority of the cost comes from chip memory display camera everything is imported right we are just putting it together obviously there's a duty on camera module right so we are still not sophisticated enough to assemble at CKD level a camera module right getting sensor from Sony so we don't have LG Innotech right factory in India LG Innotech is one of the big module manufacturers right so LG Innotech has to come here to set up that shop imports sensors Sony sensors which are manufactured at TSMC right in Taiwan then bring all the different lenses put together in a clean room everything then the value-add will increase right and although some parts if we can source from India like for display module right if we can build the entire we can fab the entire display here but we are not fabbing any display we are just building the modules in India right but not for Apple
Govindraj Ethiraj: Still the last question is between Tata's and sorry. Let me repeat that last question. So between Tata's and Foxconn or a Taiwanese company versus let's say the Indian company, where do you see the progression for Indian companies in the value-add chain?
Neil Shah: It's a good question I think Tata is very well positioned it's more horizontally integrated compared to Foxconn so Tata owns every piece of horizontal supply chain which Apple is interested in right from now fabs though it's matured node fabs imagine a particular small matured node IC or a component which goes into an iPhone, iPad or can be eventually manufactured in a fab at Otaka then it can do memory packaging also which can go to an iPhone or an iPad or a MacBook then it can manufacture all the other components around iPhone that they say eventually maybe they assemble a display or camera module and then produce the entire iPhone and then also sell that iPhone at the chroma store right and also if required they can also contribute with software with TCS and also integration with a car with Tata motors right so Tata is very well positioned and Foxconn does not have that
Govindraj Ethiraj: Thank you so much for joining me
Neil Shah: Thank you for having me
