The Markets Deliver A Friday Whopper
With the Federal Reserve cutting interest rates by 0.5%, the taps are opening up again
On Episode 394 of The Core Report, financial journalist Govindraj Ethiraj talks to Harish Bijoor, Brand & Business strategy specialist and founder of Harish Bijoor Consults Inc.
SHOW NOTES
(00:00) The Take: India’s Whiskey Trail Is A R&D Success
(05:38) The markets deliver a Friday whopper, could resume steady climb on Monday
(06:58) India is second best stock market in the world
(09:45) The rupee is strong, hits two month high
(10:43) What do India’s youngsters want?
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 regards any feedback, you can drop us a message on [email protected].
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Good morning, it's Monday, the 23th of September and this is Govindraj Ethiraj, headquartered and broadcasting and streaming from Mumbai, India’s financial capital.
The Take: India’s Whiskey Trail Is A R&D Success
Surinder Kumar looks and sounds like he works with an IT major in Bangalore, possibly in a senior position.
He hails from Kashmir but speaks English with a slightly clipped south Indian accent, presumably because he has studied and lived in and around Bangalore and Mysore for several decades.
Except that he works for a different kind of export powerhouse, alcohol and more specifically whiskey, rather than IT services.
He is a master distiller and the man behind two major global Indian brands Amrut and Indri, both single malt brands that have won a bevy of global awards, taking Indian whiskey and spirits on the global stage.
It is often said that India’s IT industry grew not because of the Government but in spite of it.
Because writing software code did not require the litany of permissions as you would in setting up a manufacturing plant or the factory inspections that you had to reckon with. Or the hurdles of transporting goods through challenged roads and through notoriously slow shipment processes.
And before you knew it, the Indian IT industry was turning in billions of dollars of revenue and then the Y2K moment arrived in 2000. And the rest is history and is still playing out.
Something similar has happened with India’s spirits industry though with many more physical restrictions.
Go to a party in India and people would rather sip Indian or more specifically Goan gins rather than the classic British brands.
When it comes to whiskey, people ask for Amrut, Paul John or Indri, both in India and overseas.
NRIs seem to like Indri and Amrut because it is Indian and it is good.
As I can see, while this is a strong make in India story, the Government itself had not much role in it.
One of the things that has worked is that entrepreneurs have figured out that conditions in India for making world class spirits were actually good.
Surinder Kumar says in the northern plains of India where Indri is matured, temperatures oscillate between 0 degrees Celsius in winter and 50 degrees Celsius in summer, with just two months of rain and 10 months of dry weather.
This extreme temperature makes the pores of the wood open up and contract exponentially, making the interaction between wood and the whisky much more pronounced, thereby imparting far more flavour to the liquid in a short period of time. In maturation, you have to apply the rule of three, that is one year in India is equal to three years in Scotland,” he told Forbes India.
Who would have thought that.
It's a similar story in gins. Stranger & Sons from Goa was ranked in the top eight gins in the world with a Gold Outstanding Medal at IWSC 2020.
Hapusa got the Gold at the International Wines & Spirits Competition 2021
Jaisalmer won a Gold Medal at the San Francisco World Spirits Competition 2023.
Tamras Gin won the gold at San Francisco World Spirits Competition 2022.
Understandably, you are not likely to see gin or whiskey entrepreneurs sharing the stage with the kind of mostly tech entrepreneurs feted at various media house award ceremonies except for maybe a beer company or two.
Nor will you see ministers in any Government consorting as such with the folks here, again understandably.
But the success of Indian spirits holds a larger lesson. First, in our quest to be a product nation, we must remember that these are equally globally recognised and awarded products made in India.
Moreover, not only are exports booming but overseas spirits majors are trying to replicate the Indian style.
The International Spirits and Wines Association of India (ISWAI) says exports have seen a big surge, with a 16% increase in volume and a 20% increase in value in the past year.
Moreover, the industry which is overall worth close to $52 billion employs close to 8 million individuals, directly or indirectly.
Moreover, the success of these brands also reflects the strength of R&D in India’s spirits industry.
You can’t be creating strong brands like these unless you have good R&D here, in Haryana or Goa. And remember R&D is a holy grail of sorts for India’s manufacturing industry.
Finally, Surinder Kumar studied food technology from CFTRI [Central Food Technological Research Institute] in Mysore, which is widely recognised as a premier institution for food technology in Southeast Asia.
In another interview, he talked of how he joined a company called Central Distilleries now part of United Spirits as part of a campus interview.
He also said the CFTRI provided him with an extensive knowledge base and a range of skills in beverage production.
It struck me, with 23 IITs and 21 IIMs, surely we could set up another CFTRI which produces and nurtures world class R&D in food and beverages, areas where Indians are clearly excelling.
And that brings us to the top stories and themes
The markets deliver a Friday whopper, and could resume steady climb on Monday.
India is the second best stock market in the world.
The rupee is strong, hits two month high
What do India’s youngsters want?
Stock Markets Bumper Friday
With the Federal Reserve cutting interest rates by 0.5%, the taps are opening up again.
Foreign investors have already pumped in some Rs 76,000 crore this year with some Rs 33,000 crore coming in just in the first three weeks of this month.
So the liquidity flows are looking good, almost too good and thus worrisome.
On Friday, the BSE Sensex was up 1,359.51 points to close at an all-time high of 84,544.31 on Friday.
The NSE Nifty was up 375.15 points to close at a record 25,790.95 levels.
In the week, the BSe Sensex was up 1,653.37 points or 1.99 per cent and Nifty surged 434.45 points or 1.71 per cent.
Meanwhile, oil is quoting just around $75 a barrel and is likely to stay in that region or rise unless there are some serious demand concerns.
Tensions in the middle east as is evident are rising at this point.
India Is 2nd Best Market
Meanwhile, the NSE Nifty 50 and S&P BSE Sensex are trailing only Wall Street's Nasdaq and S&P 500 as top-performing indexes this year, with analysts expecting the rally to extend into 2025, Reuters is reporting.
The Nifty and Sensex have gained 18.7% and 17% respectively in 2024, securing the third and fourth spots among major global bourses.
The Nasdaq and S&P have added approximately 22% and 20.5%, slightly ahead of the Indian benchmarks. Japan's Nikkei 225 and Germany's DAX follow India, rising 13% and 12%, respectively.
Foreign portfolio inflows, which had moderated in August, are on course to hit a six-month high in September, being the figures we just spoke of.
On the other hand, the sustained rally has pushed the 12-month forward price-to-earnings ratios of the Sensex and Nifty to 23.6 and 24.4, respectively—the highest among emerging markets.
Technical indicators show both indexes are now in overbought territory, Reuters said.
So what has driven this longer rally.
Well, it's primarily Realty , autos, public sector enterprises, pharma and energy.
These have been driven in turn by domestic institutional investors picking up shares worth a net of Rs 323,000 crore since the start of the year, according to provisional data from National Stock Exchange.
Mutual funds too have remained net buyers since February 2021 with contributions through the systematic investment plan hitting record highs for 14 months in a row.
Reuters quoted analysts at Jeffries saying the combined domestic inflows through mutual funds, direct participation, insurance and pension funds are "unsustainably high" of $7.5 billion per month between January and August.
And were thus near-term cautious on markets, small- and mid-caps.
Gold Up Again
We spoke of Gold prices on Friday morning and shared a bullish outlook from commodities broker Ajay Kedia.
On Friday, gold was up above the $2,600 level for the first time, building on a rally triggered by the interest rate cuts and rising middle east tensions.
Spot gold was up 1.3% at $2,620.63 per ounce mid day, said Reuters.
Rupee Rises Too
The Indian rupee rose for the fifth straight session on Friday, thanks to a general surge in Asian currencies as well as the potential of greater inflows from overseas..
The rupee closed at 83.5625 against the U.S. dollar, up from its close at 83.68 in the previous session.
The rupee hit an more than two-month high of 83.4850 earlier in the session and gained nearly 0.4% week-on-week, its strongest weekly rise this year.
Overseas investors have net bought more than $7 billion of Indian debt and equities so far in September, the highest monthly inflow since December 2023, Reuters said.
What Do India’s Youth Want?
Brand and business strategy consultant Harish Bijoor recently wrote an article about an encounter and chance conversation with a brother-sister teenagers duo on a Mumbai - Bangalore flight.
He asked both of them what their ambitions were. One said she wanted to be a fashion blogger and the other said he wanted to be a radio jockey and was already working on how to go about it.
This led Bijoor to also work on an extensive research project for an edtech company where his firm surveyed some 14,650 youngsters between 10 and 14 years of age to understand what they sought from life.
Bijoor says new India and the new Indian are divided in ambition. While urban folk by and large are now experimenting with ambition that is less solid in its intent than ever before, rural Indians have embraced the ambitions that exclusively belonged to the Gen Y and Gen Z folks of urban India.
Broadly, says Bijoor 87.3 percent of those met indicate a desire to be in the services part of the economy, while 12.4 percent want to be in the ‘manufacturing’ space.
The verdict is clear in urban India. The space to be in is services. It is glamorous, ubiquitous, consumer-centric, front-ended and seems to exhibit the ability to earn money and margins irrational to effort, as opposed to the other two sectors.
The key ambitions are to be an influencer, blogger, television anchor, retail person, and in e-commerce, digital marketing, 5G/6G technology development, and the most obvious one—an artificial intelligence or machine language developer.
Cluster 2 folks in the rural markets are a whole bit different. They are getting aggressively educated and want to move away from what their parents have been doing.
In this set, 41 percent want to be in services. The services they talk about are a bit different than the urban folk.
Banking is big. IT, ITES and civil services, starting with the IPS. Medicine and engineering are big hits here. As is teaching.
A big chunk of 51.5 percent want to be in manufacturing. There is a big ambition to own their own units rather than work for others.
A paltry 7.5 percent want to be in agriculture. Even here, the desire is to be in spaces away from the food crops cultivated by their parents. Horticulture, sericulture, prawn farming and even windmills to harvest energy are the spaces being talked about.
The folks in deep-rural markets are the ones who are talking of the future in a rather futuristic manner. Many want to do better at what their fathers and grandfathers have been doing. They speak the language of ‘natural agriculture’. This cluster is talking of studying the sciences. Biology, physics, maths and geography are big hits. Engineering is a passion. Joining the armed forces (the army, in particular) is an ambition. Teaching is spoken about in hushed tones as an ambition of high repute.
I spoke with Bijoor about the survey, what triggered it and the key findings and insights he could take away for us.
INTERVIEW TRANSCRIPT
Harish Bijoor: This is a complete study of the alpha generation as we call it, which is just about the emerging generation. Anybody born from 2010 upwards right up to now. This is likely to be the single largest living generation as on 31st December 2025.
And 2025 is not far away. And so in came an EdTech major. And this EdTech major is very concerned about India because, you know, it is one of the biggest clusters that we're going to have.
And the most relevant segment seems to be the alpha gen. So we went in and tried to look at the ambitions of new India. And so we studied across three different clusters.
The first cluster, which I call urban. Urban, in the old days, we used to call it urban plus rurban, you know, as tier two towns. I do believe there's nothing called tier two towns anymore.
They're just one big urban cluster. So cluster one is urban. Cluster two is rural, as we knew it in the past.
And cluster three is a new definition that I bring to the party, which is called deep rural. Very distanced places, places where I keep saying, you know, where you and I haven't been to as yet. So total sample size 14,650.
And the youngest person met was possibly 10 years old and the oldest was 14. What is their ambition as far as careers are concerned?
Govindraj Ethiraj: Right. And some of it, I mean, I don't know, I guess this is the urban bias and the people you meet around. The people you've spoken to, the young people in urban India seem to be saying that they want to be influencers, bloggers, television anchors, but they also want to be in digital marketing and technology development.
So what is this telling us?
Harish Bijoor: Okay. This is telling us that there are three Indias and in each of these Indias, there's a different ambition that the young are articulating. It so happens that in the old days, you know, ambition was a need.
Okay. You needed it to survive. Today I'm saying ambitions are, an ambition is a need.
It is also a want. It is a desire. It's an aspiration.
And in the case of urban folk, it's even a fantasy. And therefore urban folk want to do the kind of tasks which are, you know, really wealth creating, which are glamorous, which are front-ended, which are reasonably frivolous at times, or hitherto called frivolous. And I think, you know, urban people are very comfortable doing that, including, you know, dabbling in AI and ML and tech of every kind, but very high-end tech.
The rest of the people seem to be a little more real in terms of the careers. Again, I'm not passing a value judgment, but suffice to say that in rural areas, people are saying that, Hey, I want to be in services, but I want to be in banking. I want to be in teaching.
I want to be in telecom, stuff like that. So that's the second cluster. And the third cluster, which is deep rural, they seem to be the real, real people of futuristic India.
Okay. And now these are guys are saying, I want to be in agriculture. And they're saying that, you know, fundamentally agri is going to attain food security for the nation.
Okay. I want to be in green agriculture. That's an ambition.
I want to serve in the armed forces, a small number. Okay. Because that's gone out of the window from urban, even rural markets.
So deep rural, there's still a year to want to be with the armed forces. So I think, you know, three different areas, three different sets of ambitions. And if you total one plus one plus one, it's thankfully three in the sense that I think it balances out India.
Otherwise India would be lopsided. If every Indian wanted to do what an urban Indian wants to do, I think we'd be very lopsided. And that is the disaster of some of the developed economies of the world, like the United States of America.
Govindraj Ethiraj: And it's interesting because you've classified them as manufacturing and services or other services and manufacturing. So all of this, the blogging and the television anchoring and all of that, including, let's say, wanting to be in AI and ML is services in your definition, and the overall still seems to be services. If you look at the whole 14,650, am I right?
Harish Bijoor: Oh yes. And I think it goes with the GDP of this country because, you know, 56% of the GDP emerges out of services as far as India is concerned. But if you look at the three clusters, when I actually triangulate the data, I see one India, which is urban India, which I call services India, which is totally, totally services oriented.
The second India is manufacturing and services oriented, which is really rural India. And the third India is the India which is agriculture and manufacturing oriented. So third India, which is deep rural India, is really not into services.
They think services are hollow stuff. People have asked, can you eat a telecom service? Can you drink a blonde?
So I think, you know, wanting to be a blogger and wanting to be an influencer, and these are considered to be not so solid careers for people in real, deep, rural India.
Govindraj Ethiraj: And anything here surprised you, Harish? For example, whether it's rural or urban, some of these choices are very deep. In the urban side, let's say young people, and we're talking about people under 15, talking about doing AI and ML.
And in rural, let's say the examples that you said, talking about agriculture and green energy and so on.
Harish Bijoor: If you look at it, not very surprising because, you know, coding is being taught to kids who are as old as five years old, right, in urban India. And, you know, that seems to be the disaster. And therefore, what really happens is you become what you learn, and you become what you see, and you become what you watch.
And I think since you see a lot of it, it's all in the face. I mean, the blogs are in the face. Influencers are in the face.
Glamour is in the face. Cricket is in the face, though not too many people are saying, I want to be a cricketer, okay, despite that. Bollywood is in the face.
Not too many people are saying, I want to be a Bollywood star, because everybody knows the kind of numbers that actually read that stratosphere. It's not surprising that urban India is talking this. But what surprises me is deep rural, you know, deep rural articulating, you know, words such as green, non-technology-oriented agriculture, hand-picked crops.
You know, young children talking about hand-picked crops, naturally grown crops. I mean, you know, without pesticides and fertilizers, because in Punjab, children came up and said that my granddad is sick, my grandmom is sick, my uncles are all sick, my father is not too well. You know what they're talking about.
They're really talking about a relationship of agriculture with pesticide, with productivity, and the wrongdoing of such stuff, which has affected the health of people. And therefore, they're saying, I want to be in clean agriculture. I want to be in green agriculture.
I want to be natural. And I want to take care of the food security of the country. This is deep rural Punjab that I'm talking about.
Same thing with Haryana. It's a small state. And Tamil Nadu.
Oh, Tamil Nadu is big on this. I mean, you know, I think the awareness levels of the young children in Tamil Nadu, I can't call them children, 10 to 14, I think, you know, they're new India. They're going to rule us.
We are not going to rule them. And I think it's great to hear these kinds of talks coming.
Govindraj Ethiraj: And you're saying that in Tamil Nadu, also children were talking about agriculture in the way, let's say, children in Punjab and Haryana.
Harish Bijoor: Oh, yes, very much. In fact, children, I mean, you know, I was stunned when a 14 year old told me that, you know, hey, there are many crops that we grow. I mean, there's rice, there's paddy.
Do you know how much water it takes? So, I want to do research in the space to say, how can I grow paddy with less water? Because the world is going to be water challenged.
And these are words that come from children who have gone to real deep rural schools. And these are government schools. They have one teacher who takes some four classes, four different sections.
And I think totally they have just three teachers in the school. And this is the kind of stuff they're talking about. So, I think, you know, plenty of hope for this country.
Govindraj Ethiraj: And how many states did you cover, Harish, in this survey?
Harish Bijoor: Not too many. We restricted how far we could reach. So, we clustered them into northeast, west, south, and central.
And we've not done Jammu and Kashmir. That's out of the ambit. But the northeast, we have touched.
Govindraj Ethiraj: Right. Now, this survey is done presumably from an education lens or what students may desire. Is there any other takeaway for you as, I mean, from whichever way you want to see it?
Harish Bijoor: Yeah, yeah, yeah, yeah. There's plenty out of this, Govind, because, you know, this is giving me ideas for other pieces of research that I can actually go into. Just saying that we know so little of deep rural people.
You know, first of all, I don't think anybody understands my definition of deep rural at all. So, I am very happily and proudly doubting it that somebody called a market urban. Somebody defined rural urban.
Somebody said rural. But I am defining something called deep rural. And this deep rural is that part of India, which is emerging.
You know, deep rural emerging. There's something called desi pride movements out here. I call it desi revival.
I mean, you know, very deep in deep rural, people tend to say, why should my teacher wear trousers to teach to me? A child is asking, okay, not child, 10 to 14 year old is asking, why cannot my teacher teach in a dhoti? Because teachers are told that they need to be in trousers and shirt, apparently.
Why should they wear a moose shirt? So, this is a desi revival to say that, you know, all the desi things are great things. And in one place, I mean, Madurai, I mean, the guy popped up and said, you know, this cola is really disturbing the ecosystem quite badly.
You know, water, big name company, I will not name it. You know, how much of water it's drawing out and how much of pollution it's putting back into the ecosystem. Why should all of us not drink Jigar-Thanda?
Jigar-Thanda, incidentally, Govind, you will know this, is from Madurai. I mean, you know, Jigar means liver and Thanda means cooling. It's one of the tastiest, delicious drink that comes out of the gut of Madurai.
And I think there's plenty of revival stuff happening.
Govindraj Ethiraj: You're saying some of these trends, including, let's say, awareness about environment, sustainability and so on, cuts across the entire spectrum or was it more leaning towards the deep rural, as you said? It's polarized.
Harish Bijoor: In urban, there's a huge degree of sensitivity when it comes to green ESG goals. People understand the ESG goals. And the other end of India, which is deep rural, understands this.
And I think, you know, one is out of the fact that, you know, I live amidst it and I know what it is, which is deep rural. Whereas urban says that, I've been hit badly by the stuff that's come at me. Like in Delhi, kids are very, very angry about the pollution that they have to breathe in.
And I think, you know, people are talking about that. There are places in India, they're talking about water shortage. In Bengaluru, there are people who have been speaking about water problems and day zero as something that's approaching.
A 10 to 14-year-old young man, woman and then understands these things so clearly. I mean, it's very good to hear it. But middle India, you know, rural India is in a state of a flux.
Rural India is still bothered, I think, you know, in between the roti, kapda, makan kind of a bridging. It's really doing what urban India used to do in the old days.
Govindraj Ethiraj: Harish, thank you so much for joining me.
Harish Bijoor: My pleasure.
