The Markets Begin The Week With A Bang
While there are good reasons for why Indian markets are strong right now, there are no clear good explanations
On Episode 562 of The Core Report, financial journalist Govindraj Ethiraj talks to Vandana Hari, Founder & CEO at Vanda Insights as well as G.R Senthilvel, Secretary of Tirupur Exporters and Manufacturers Association.
SHOW NOTES
(00:00) Stories of the Day
(01:00) The markets begin the week with a bang
(05:29) Gold hits fresh high, dollar is down
(07:35) Oil price volatility is making it difficult to project outlook
(16:32) Garment exporters want to exploit 90-day tariff pause but find it tough to freeze pricing with US importers
(24:41) China sends back ordered 2 Boeing aircraft, Air India and Malaysian Airlines reach out to Boeing to buy them
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 Tuesday the 22nd of April and this is Govindraj Ethiraj, headquartered in Broadcasting as well as Streaming from Mumbai, India's financial capital and the top stories and themes.
The markets start the week with a bang.
Gold hits a fresh high but the dollar is down.
Oil price volatility is making it difficult to project outlook.
And China sends back two ordered Boeing aircraft. Air India and Malaysian Airlines reach out to Boeing to buy them and other aircraft that are not now going to China.
Garment exporters want to exploit the 90-day tariff pause but are finding it tough to freeze pricing with US importers.
The Markets Are Off With A Bang
While there are good reasons for why Indian markets are strong right now, there are no clear good explanations except to say that India is in a rain shadow of sorts, protected from the global chaos in trade and capital flows to a fair extent, and benefiting to some extent. Christopher Wood, Global Head of Equity Strategy at Jefferies, the Brokinghouse, has recommended investors sell US stocks and hike exposure to India as the flip-flop of tariffs by US President Donald Trump has put markets on the edge, according to a reported business standard. So, that's one good reason.
The other factor is, of course, trade discussions with the United States are only likely to get better from here on, at least from India's perspective, and possibly things could land somewhere between the 10% flat tariff in force and the 26% threatened tariff. Of course, nothing is predictable in this department. US stocks are still trading at 19.2x forward earnings and global investors should continue to reduce positions in favour of Europe, China, and India, according to Christopher Wood. He said that this does not mean that Trump cannot generate new positive momentum by the approach already suggested, namely, dramatically scaling back tariffs and refocusing on tax cuts and deregulation, but it does mean that the base case remains US underperforming other stock markets in the context of a weakening US dollar and a bearish Treasury bond market, Christopher Wood wrote, adding that they were increasing their weightage in India in the region.
The major indices continue to rise in their northward march for the fifth consecutive trading session, with banking, IT, and auto sectors doing well. The BSE Sensex rose 855 points to close at 79,408, while the Nifty 50 was up 273 points to close at 24,125. So, the Sensex has now rallied about 7.5% of 5,562 points in the last five straight trading sessions, and the Nifty 50 has risen about 7.7% or 1,726 points in the same period, according to a calculation by Business Standard. So, the broader markets have outperformed the benchmarks with the Nifty Mid-Cap 100 and the Nifty Small Cap 100 rising about 2.5% and 2.2% on Monday. Now, the Nifty Bank Index, which represents about 12 large and mostly liquid bank stocks in India, has hit a fresh high, rising as much as 2% or close to 2% on Monday, pushing past its previous record in September last year. So, the Bank Index has now gained about 7% since April 2nd, when those tariffs were announced, outperforming the benchmark Nifty 50 by more than 3%, according to Reuters, which added that Indian bank stocks are seen as being relatively shielded from the risk of global tariff tensions, given the total limited exposure to international trade.
Fundamentals for most lenders also remain robust, according to analysts. Now, ACFC Bank's share prices hit a fresh record high after it posted margin expansion and an improvement in asset quality in the March 25 quarter results, which came out a few days ago. The bank, according to analysts, reported better credit growth in the last quarter of the last year, as well as stable core margins after growth calibration for the past one year, and emits pressure to bring down its loan-deposit ratio and manage its priority sector lending, according to a Reuters report.
So, the stock hit a record high of Rs 1,950 per share, before closing a little lower on Monday once again. Brokerage Motilal Oswal has raised earnings estimates on HDFC Bank by 3% for 2025-2026 and revised its price target on ICICI Bank 3% higher to Rs 1,650. Meanwhile, investment bank Nomura has revised its Nifty target to Rs 24,970 for March 2026, from its earlier target of Rs 23,784 for December 2025, and it expects the Nifty to trade at 19.5 times its estimated earnings of Rs 1,280 for 2026-2027, compared with an earlier multiple of 18.5 times. Now, these are obviously amongst the first positive brokerage reports that are emerging, and it will be interesting to see how other brokerages now look at India and whether they would be further re-rating on the positive side with all these shifts in capital flows. On Wall Street, stock futures were down on Monday morning, following yet another negative trading week for Wall Street, as investors saw little signs of progress on global trade talks, according to CNBC. Dow Jones futures were down over 400 points.
S&P was down, while Nasdaq 100 futures were also down. The three major indices on Wall Street had logged a third weekly decline in the last four trading weeks, and U.S. markets were closed on Friday.
Gold Hits New Records
Gold prices are very close to the Rs 100,000 mark for 10g in India, but they hit fresh records on Monday, thanks to recurring concerns over global economic growth and a weaker dollar, which further boosted the rally.
So, gold has now gone above $3,400 per ounce, which is a new record high on Monday, as the dollar weakened and uncertainty over the economic impact of U.S.-China trade tensions pushed investors to gold, which is a safe-haven investment. Gold prices hit a record high of $3,424 an ounce earlier on Monday. So, gold is a liquid and hedge asset and has been consistently hitting record highs and has gained more than $700 since the start of 2025, according to a Reuters report.
It crossed $3,300 last Wednesday and another $100 up in just a few days. Meanwhile, the rupee has extended its winning streak on Monday as the dollar remained on the defensive, thanks to investor confidence, which has now been hit by President Trump's criticism of the Federal Reserve's chief in the United States, a move which is seen by markets as destabilising because it puts the independence of the central bank in question. The rupee closed at Rs 85.12 against the U.S. dollar, which is up for the day and touched a two-week high of Rs 85.04 against the dollar earlier on Monday before slightly pulling back. The dollar index has now hit a three-year low, dropping about 0.8% to 97.9%. Asian currencies are also doing better with the Thai Baht and Malaysian Ringgit rising in Asia. Analysts told Reuters that fundamentally markets are pricing in heightened geopolitical risks thanks to U.S. tariff tensions and stagflation concerns, while resilient central bank demand offers an added tailwind for prices as well. Meanwhile, Reuters also reported that China has warned countries on Monday against striking a broader economic deal with the U.S. at its expense, a move Trump is reportedly seeking from countries looking for tariff reductions or exemptions.
Oil prices are volatile
The U.S. Interior Department on Friday said it would begin taking public input for a new five-year offshore oil and gas leasing programme that could include new zones in the Arctic and elsewhere to maximise energy development. The president ordered government agencies to identify ways to increase already record-high U.S. oil and gas production, arguing that past administrations had unnecessarily curtailed drilling to combat climate change. He also repealed former President Joe Biden's efforts to block oil drilling in the Arctic and along large areas of the U.S. Atlantic and Pacific coasts, according to Reuters. Now, all of this comes on the heels of already high supply promises from the OPEC or the Organisation of Petroleum Exporting Countries. And with tariff-related concerns on one side and supply surplus situations staring at the market on the other, the oil market is, not surprisingly, going through a crazy ride. I reached out to Vandana Hari, Singapore-based energy analyst and founder of Vanda Insights, and I began by asking her how she compared the oil market to previous years and how she was building her outlook for the coming months.
INTERVIEW TRANSCRIPT
Vandana Hari: So I think how crazy it has been, probably both of us can agree, just when we thought that we had seen everything with COVID and the Ukraine invasion and then the Gaza war, this does go into a completely different reel, I would say. I mean, you know, one falls short of adjectives and superlatives trying to explain what it means for global trade, global economies, the Trump's tariff blitz that he has unleashed. So, you know, unfortunately, I don't see crude settling into calmer waters, at least until the dust has settled on initially this 90-day period, which Trump has set out for trade partners to sign deals with.
But even after that, somehow, Govind, I feel reluctant to say that we may enter a calmer period, a period with more predictability. It's really hard to say because, you know, what he has sort of unleashed onto the world is totally unprecedented. So it's very hard to see.
But overall, where does this all come down for oil, I would say, is continued uncertainty. That uncertainty particularly relates to demand because the uncertainty with tariffs is with regard to the global economic growth.
Govindraj Ethiraj: Right. We've also seen both the International Energy Authority Agency and OPEC, the Organisation of Petroleum Exporting Countries, lower their demand forecasts, though differently. At the same time, OPEC is increasing its production.
At the same time, the U.S. is being projected to slow down and China is also facing pressure. So there are two big demand centres that are likely to see a slowdown as things stand. But at the same time, the supply side, we seem to be seeing an increase.
So how is all this computing?
Vandana Hari: As of now, the crude complex is far more guided by demand worries because, again, on economic uncertainties and what that means for oil demand, we are in totally uncharted territory with regards to Trump's tariffs. As far as supply is concerned, you mentioned OPEC is increasing supply after a long period of restraint, in a prolonged period, I should say. The 2.2 million barrels per day of voluntary cuts, as they're calling it, by just eight members were actually supposed to start being unwound late last year. But they've been pushed back again and again. And finally, they are starting to happen. OPEC did spring another surprise at the market a few days ago when they said that they'll actually accelerate bringing back this oil into the market, which was a complete U-turn from their philosophy of bringing that oil back very, very gradually, cautiously.
So that is also something the market had to factor in while we're talking about surprises. On the supply side, the other impact is going to be much longer term. So you will have already noticed discussions of how U.S. shale, for instance, you know, the major driver of U.S. oil production growth, needs much healthier, higher prices than what we are seeing now, right? So WTI in the low 60s is probably going to snuff out shale production growth. But however, the market is not factoring that in because that should have been a bullish factor, right? But you don't price that in because that's a very slow acting force.
Govindraj Ethiraj: Okay, so if you were to now look at how things could evolve in coming weeks or months, what are the factors you think will play a role in the way oil prices could move or not move?
Vandana Hari: I think on the tariffs front, a big hint on what might change the course quite dramatically lies in the events of last week. So you'll recall last week, what happened was the market sort of ran away with the narrative that it looks like China and the U.S. are both very willing and open to come to the negotiating table. Now, it was premature.
We saw crude jump by almost 3% last Thursday as a result of it. So that, to my mind, is now, of course, you know, that was quite premature. It doesn't look like the U.S. and China have even set any timetable to start their talks. So it's far away. But that could change the course quite dramatically of sentiment as far as the oil market is concerned. Now, I'm not speaking here about the overall financial market sentiment, but definitely for oil, a rapprochement, potential for a thaw between the trade dispute between the U.S. and China that could lift some of the pressure we're seeing on crude. But then again, you know, I think we can't count those chickens before they're hatched. As of now, it looks like pretty much a stalemate. The other area I continue looking at would be the U.S. sanctions regime. So we know they've been tightening sanctions against Venezuela, Iran. As of now, all of this is also pretty much factored into the market. But on the flip side, if the Ukraine ceasefire deal does begin to crystallise and the U.S. starts looking at pulling back some of the sanctions against Russia, I would expect that to be a bearish pressure on crude.
Govindraj Ethiraj: The U.S. wants to export more LNG and countries like India might import more LNG in order to balance the tariff discussions and find some leeway. How do you see that changing or impacting the overall oil economics or oil and gas economics?
Vandana Hari: Yeah, that's an interesting question, Govind, and a really curious phenomenon to my mind, because it's not just India. A whole of Southeast Asian nations are making a beeline already starting to promise that they will buy more oil, more gas from the U.S. China is the only exception. China has actually cut back dramatically.
It has almost stopped buying U.S. LNG and it has dramatically cut back crude imports. But the rest of the world, of course, Canada and Mexico are exceptions, right? They are actually exporters to the U.S. But the rest of the world is making a beeline, you know, wanting to buy more crude and LNG. The thing is, this is not necessarily a clear economic decision. So I think it's going to be quite complicated for policymakers and the companies within these countries that are committing to buy weighing. OK, how much do we gain in saving on import tariffs by the U.S. and how much do we lose by potentially buying U.S. LNG and crude when cheaper alternatives are available? If you really want to get to the bottom of this, it's going to be very, very complicated mathematics.
If at all, you can actually calculate all of it. I suspect the decisions will be made on a very political basis right now because, you know, let's face it, most of these countries have their backs to the wall. So they are going to promise they will.
And the U.S. is a growing exporter, a major net exporter of energy. So I think the problem might also be on the U.S.'s end when it has agreed to supply to all these countries and then it needs to balance, right? How?
Because it's got this limited quantity to sell and how does it, you know, where does it export and where it doesn't. In short, I can only say that, you know, it will take a long time for us to see how the cookie crumbles and, you know, how the U.S. manages its commitments to supply, how the countries are able, what the countries are able to get in return for these promises.
Govindraj Ethiraj: Vandhana, thank you so much for joining me.
Vandana Hari: Thank you, Govind.
Garment Exporters Are Trying to Freeze Prices
All of whom are based in Tirupur. Now, this is a trying period for both the exporters and importers because the importers want the exporters to bear half the cost of the higher tariffs and both are trying to negotiate their way out. Tirupur is India's largest textile cluster accounting for 90% of the country's cotton knitwear exports and 55% of overall knitwear exports and recorded its highest ever export revenue of about 40,000 crore rupees in 24-25.
That's the year that's just ended. Thanks also to orders from Bangladesh Shifting Yard, according to a Business Standard Report. I reached out to G.R. Senthivel, Secretary of the Tirupur Exporters and Manufacturers Association began by asking him what kind of apparel his members were mostly manufacturing and the difference in value between Indian exports and other countries and if that mattered.
INTERVIEW TRANSCRIPT
G.R Senthilvel: All types of garments which are given by the end customer, I mean, end customer means U.S. importers, traders, what are the garments they want, we will make it and send it to them. T-shirts, collar shirts, track pants, nighties, ladies items, innerwears, everything. It depends upon the customer's requirement we are making and we will export those.
Govindraj Ethiraj: Are we able to do higher value-added items as compared to let's say other countries like Bangladesh or Vietnam or China or is it the same kind of product that we are also manufacturing?
G.R Senthilvel: Value-added means, value means it depends upon the product. Suppose basic garments are maybe $2, $3, $4. Sometimes collar shirts will come to $5 to $6, including the track pants, it will come to $7 to $8.
Depending upon the product, the customer value is fixed by the end customer.
Govindraj Ethiraj: And when you say $3 to $4 or $5 to $6, this is the price it leaves from India, right? Or is it the land?
G.R Senthilvel: The price is fixed by the customer who is buying our garments. Most 90% of the transaction will be in the USD only. Apart from some European countries, we will do it in the Euro.
Govindraj Ethiraj: Right. And this is the export price, right? This is not the landed price in the US or is it the landed price?
G.R Senthilvel: No, it is only the export price. Sometimes they will ask for a CNF.
Govindraj Ethiraj: So that's my next question. So after we've seen some increase in tariffs, we are already, I think, looking at a 10% tariff on exports to the US. So are orders now factoring that 10% in or is that 10% being borne by the importer at this point?
G.R Senthilvel: The negotiations are going on between the manufacturers and customers. They are insisting that the sharing ratio is 50-50. Already we got a 16% tax on US exports.
Now the government is increasing it 26%. That means 10% is more. The customer is insisting on the 50-50.
Some customers are asking for the 10% deduction in their rates. Otherwise, we hold the shipments, hold the productions, no further order. Like that, this sort of thing is going on.
But still now, we also don't know what their government will do. The US counterpart, not 100% about what their government is going to do. If it is, they fix it with 26%, which means next month maybe Trump will do it for 46%, which means what will be the business solution.
So it is not the right time, right thing for them to decide how to fix this problem.
Govindraj Ethiraj: As I understand, your exporters have been getting more orders because the tariffs are higher on Bangladesh and China and Vietnam. Now, what's your sense? I mean, in terms of capacity, I mean, today, what is the output that your members are able to produce and how much more can they do if orders increase?
G.R Senthilvel: Sir, it is not a problem for us. There is no problem with the manufacturing capacity with netted garments or textiles. We have enough resources.
But I don't think so in Bangladesh and Vietnam and this problem will exist for some more time. Because all will be the political gimmicks as per my view and my association view. All this will be the political gimmicks.
This is the right time for our central government to interfere in this one, to safeguard all the exporters. It is their duty. While we're signing in the WTO, you had the World Trade Agreement 10-20 years before.
All our subsidies and other things are removed from government policies. We got incentives in our export value. That is called the drawbacks.
Initially, it was 16%. Then it will reduce to 11%. Then it is reduced to 9%.
Then it is reduced to 7.5%. Then it is reduced to 5%. And one fine morning, they said that is only 1%. What they told the government was, we got information that the government people are told that while we're signing the WTO and GATT, we have to close all our subsidies to the industry.
For the benefit, the counter-governments is not raising the other taxes. So that equally that other exporters and the manufacturers of all the countries do the business in the common way.
Govindraj Ethiraj: What I'm trying to understand is how Tirupur's exporters are able to navigate this period as in, you know, you're increasing capacity or increasing output because right now there is a window open. But that window may also close after two months or so, in which case would we be at a disadvantage once again?
And if so, how are manufacturers gearing up for it?
G.R Senthilvel: The window is not at all open, sir. Because all the exporters and manufacturers and the importers are waiting, they are holding the transactions, they are holding the orders, holding the business to wait for the final outcome.
Unless otherwise some sort of solution will arrive by the governments, there is no use of going for the other steps. Our industries are telling us that if the US government is imposing this taxation, it means we will benefit. Yes, general view, that's our view.
It is not going to happen.
Govindraj Ethiraj: Are you saying that at this point, most of the manufacturing amongst your 1,200 members is on hold?
G.R Senthilvel: No, no, no, not like that. We are doing it. We are doing Europe, we are doing South Africa, we are doing Mexico, we are doing Brazil.
You need to say what the importers are telling you to, go slow on the production. We will wait for that. Then they are also finding some solution, how to tackle this problem.
We are working on it. A lot of things are going on between the exporter and the trader, how to sort out this problem. We are also representing our union government, the central government, to give some relief, to help small and medium scale people by way of giving the drawbacks.
Once again, they are giving the drawbacks and also reducing the bank interest rates and don't push the TST and the government agency to the collecting mode, severe on this exporter, on manufacturer, on taxation payout. So we are requesting our union government to give subsidies, cut interest rates. Like that we are pushing for the central government.
Govindraj Ethiraj: What is your profile of your members in terms of total numbers currently and where are they mostly based? Based on Tirupur. And how many members in all?
G.R Senthilvel: Sorry, actually 1200. In that 1200, approximately 600 members are the exporters. Okay.
Govindraj Ethiraj: Thank you very much for joining me, Senthilvel.
G.R Senthilvel: Thank you, sir. Thank you.
—-
Meanwhile, Reuters is also reporting that the government in India is also to impose a temporary tariff called a safeguard duty of 12% on steel imports to try and curb a surge in cheap imports from China and elsewhere. The proposal to impose this tax has been around for a few months now.
Action In The Aircraft Import Market
It's interesting how tariff wars can play out. China is now sending back Boeing aircraft, including two Boeing 737-8 MAX aircraft with liveries to Boeing that went between yesterday and the day before. With more cancellations likely thanks to the high tariffs on imports into China, other airlines are moving in. Air India is looking to take Boeing planes that have been rejected by Chinese carriers, according to Bloomberg, joining Malaysian airlines, who are also believed to have made similar overtures.
Chinese airlines were told by the government not to accept Boeing aircraft, according to a Bloomberg report last week, after Beijing set reciprocal tariffs of up to 125% on US-made goods. At a roughly $55 million tap for one aircraft, that's a Boeing 737, approximately, that is, you could imagine what the price would be post tariffs. Air India plans to approach Boeing about acquiring a number of jets.
The US plane maker was readying for Chinese airlines before reciprocal tariffs thwarted the handovers, Bloomberg said, adding that Air India is also eager to take up slots for future deliveries, should they become available. Air India had earlier accepted 41 737 MAX jets, originally built for Chinese airlines, whose deliveries had been deferred due to issues, including safety concerns with lithium batteries in the plane's cockpit voice recorders. Malaysian Airlines' parent company, Malaysia Aviation Group, is talking to Boeing about acquiring new jets that become available if Chinese airlines stop taking those deliveries, according to Bloomberg, which reported its managing director speaking to Malaysian state news outlet, Bernama.
MAG, owned by Malaysian sovereign wealth fund Kazana Nasional, has been steadily growing and renewing its fleet and aims to operate a narrow-body fleet of 55 new generation 737 MAX aircraft by 2030.
