The Markets Go Flat in Search Of Signals
The Indian markets are flat and traded narrowly on Thursday
On Episode 519 of The Core Report, financial journalist Govindraj Ethiraj talks to Varun Singh, Managing Director at XIPHIAS - Certified Investment Migration consultant. We also feature an excerpt from a recent panel discussion moderated by the Core’s editor-in-chief (at BioAsia 2025 in Hyderabad) which featured amongst others G.V. Prasad, Co-Chairman & Managing Director Dr. Reddy's Laboratories, India.
(00:00) Stories of the Day
(01:09) The markets go flat in search of signals
(05:44) Brace for one of the warmest March ever
(07:25) A personal story in the life sciences innovation journey
(16:39) India’s G20 Sherpa Amitabh Kant says Mahindra and Tatas will give Tesla a run for its money
(18:21) The new US gold card replacing the EB5, what will be the outcome?
(29:19) Air cargo is growing but growth slows down in January
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 Friday, the 28th of February, the last day of the month of February being the second month of the year of 2025. And of course, time is flying. And this is Govind Raj at the Raj Headquarter and broadcasting and streaming as always from Mumbai, India's financial capital, the top stories and themes.
The markets go flat in search of new signals.
A personal story in the life sciences innovation journey from Dr. Reddy's.
India's G20 Sharp, Amitabh Khan says, Mahindra's and Tata's will give Tesla a run for its money.
Brace for one of the warmest months of March ever.
The new U.S. gold card replacing the EB-5 visa, what will be the outcome?
Air cargo is growing, but growth rates slow down in January.
The Markets Are Flat As They Come
The Indian markets seem to have joined the flat earth society, it would appear, so narrowly for trading on Thursday. The question really facing investors and traders is at what point will that recovery come? It's tough to say, because you have to remember that the current fall is not triggered by a sudden cataclysmic event like the 2008 financial crisis or even the COVID crisis of 2020, rather a steady but consistent fall that started at the end of September 24.
At this point, the Sensex and Nifty have fallen about 14%, while the Nifty 500, which is a broad index, has fallen about 20%, which takes it into bear territory. The only consolation is that in the post-liberalization years the markets have usually tended to bounce back, though sometimes the recovery can take long, including years. On Thursday, the Sensex swung around but eventually closed up only 10 points at 74,612, while the NSE Nifty 50 index was almost unchanged at 22,545.
We spoke of the Reserve Bank of India loosening its grip on non-bank finance companies, allowing them to borrow more easily from banks, reducing risk weightages for more consumer loans, obviously in an attempt to increase retail demand or increase consumption. Shares of non-bank finance companies were up with stocks like Bajaj Finance and Bajaj FinServ, up about 3%. Sriram Finance from the Nifty 50 index was up about 5%.
Other stocks like L&T Finance and Mahindra and Mahindra Finance were also up quite sharply according to business standards. The broad market continues to be under pressure, though. In this phase, the BSE mid-cap index fell 1%.
The small cap was down almost 2%. In an interesting and somewhat candid admission, Chris Wood, the global head of equity strategy at Jefferies, told Business Standard he was likely to chase China rather than India in the short to medium term. Now, he's, of course, echoing what many fund managers globally are saying, and more so after that deep-seek moment, and that a good part of the current rally in Chinese stocks is driven by and composed of tech and AI-linked stocks.
And that's the piece of the pie investors want right now in China. Wood told Business Standard he remains structurally bullish on Indian equities, but that's from a long-term perspective. Translated, he's waiting for prices to fall further or a deep-seek-like moment to happen in India too.
If someone has no exposure to Indian stocks, they should start buying now. When the tide turns, the rally would be very sharp. And that said, and this is the important part, listen carefully, he says, we are still in a sell-on-a-rise market in India and not buy the dips.
Now, that statement, of course, reflects what we see happening every day in the markets, or almost every day, which is markets rise in early trade and then start cooling off or falling off. Wood says he's bullish on sectors like travel and tourism, which he thinks can give superior returns. He also said that while Indian market valuations were very high at its peak, the massive selling by foreign investors has surprised him.
He summed up the two phases of foreign institutional investor selling. First, to rotate money towards China as it started unveiling, I'm guessing, that's the reason, a series of stimulus packages which we saw late last year. And second, after deep sea.
He also pointed out the failure of India's private sector to drive a broader capex cycle, which as we know, is largely driven by the government. There is a growing doubt of the lack of capex coming from the private sector, which has been disliked by the markets, according to Wood, in that conversation with Business Standard.
Gold Prices Are Steady
If you're a gold price watcher and a careful one at that, then do pay close heed. Gold prices have fallen 1% to their lowest level in more than a week on Thursday as the US dollar firmed up. Spot gold was down 1% at $2,889 an ounce on Thursday, its lowest since February 17th, Reuters said adding prices had hit a record, or rather reminding that prices had hit a record of $2,956 per ounce on Monday.
And The Rupee Is Steady
The rupee did not move much on Thursday, thanks also to some intervention by the Reserve Bank, which overall seems to have returned to a more active role after perhaps staying more neutral for several weeks earlier. The rupee ended at Rs.
87.20 against Rs. 87.21 in the previous session. Traders told Reuters the intervention was not just to stabilize the currency, but to also curb large one-way moves, thus reducing any speculative trades against the rupee.
Analysts also told Reuters that the prevailing global challenges outweigh the existing advantages for the rupee and the downside bias remains for the currency. Asian currencies were also weak with the offshore Chinese one slipping to about 7.27 to the US dollar, according to Reuters.
It's A Warm March Ahead
India could see one of the warmest March months on record with above average temperatures likely to hit yields of the maturing wheat crop, according to Reuters. Now, the likelihood of that warm March in the context of a weak Northeast monsoon has already been flagged, and we talked about it earlier. India is the world's second biggest wheat producer and has had three consecutive years of poor crop yields since 2022.
Higher temperatures could hit yields for the fourth year now, and that's obviously reducing production. Officials told Reuters that March is gonna be an unusually hot month and both the maximum and minimum temperatures will remain above normal for most of the month. And if you're in Mumbai, where temperatures have been routinely hitting 38 degrees plus in recent days, well, you can imagine the rest.
Day temperatures are expected to start rising from the second week of March, and by the end of the month, maximum temperatures could exceed 40 degrees Celsius in many states. Remember, we're talking March and not May or June, which is traditionally considered peak summer. India's wheat-growing states in the central and northern belts are likely to see those jumps in temperatures in the second week of March, with temperatures rising about six degrees Celsius above average, according to those officials, and that's exactly what we've seen in Mumbai as well, about roughly six degrees above average.
So March could not or may not be conducive for wheat, chickpea, and rapeseed, and crops could experience heat stress, those officials said. Winter crops, like wheat, are planted from October to December and require cold weather conditions throughout their growth cycle for best yields. Indian wheat prices have already jumped to a record high this month, thanks to dwindling supplies.
India's Pharma Industry Braces For Change
India's contract drug makers want the government to lower regulatory hurdles, even as it moves faster on clearances for raw material imports. India's Contract Research Development and Manufacturing Organization, or CRDMO as it's called, the sector is at an inflection point with the potential to grow sevenfold to about $22 billion by 2035, according to a report by consulting firm, Boston Consulting Group, released at BioAsia in Hyderabad earlier this week. Globally, the market for such contract manufacturing stands at about $140 billion.
India's contract drug manufacturers have gained from global companies' efforts to diversify their supply chain, particularly after the pandemic and a US bill that prohibits, or would prohibit, federal contracts with certain Chinese biotech firms on national security grounds, according to Reuters. The problem, of course, is that India's policies are still catching up. Approvals take a long time, and regulatory demands tied to some raw material imports mean Indian firms need eight to 15 days to initiate projects, which their Chinese peers could do within three days, according to a senior partner at BCG's healthcare practice, again quoted by Reuters.
At a session at BioAsia that I sat through, Piramal Pharma's chairperson, Nandini Piramal, publicly lamented the lack of customs warehouses at right locations, logistics costs, and not enough cold storage units, apart from delays tied to the clearance of certain raw material imports. While India has done well on contract manufacturing, despite all the hurdles, this also puts the spotlight back on innovation and why India lags here. Now, there are many reasons which range from regulatory factors to perhaps the lack of sufficient trained scientists and patient capital to fuel long-term bets of the kind the life sciences industry would want.
At a CEO panel at BioAsia on Tuesday, I asked G. V. Prasad, co-chairman and managing director of Dr. Reddy's Laboratories, how he viewed the challenge of innovation in life sciences and what held back Indian companies. I also asked him in the conversation how the late Dr. Anji Reddy, the founder of Dr. Reddy's Laboratories, could have viewed the same challenge.
INTERVIEW TRANSCRIPT
G. V. Prasad: I represent Dr. Reddy's Laboratories here in India. I want to give you a little bit of the history of our drug discovery efforts. We started drug discovery in 1994 for the first time in the India Bioretic Cup.
We went on that journey for about 15 years. We tasted a lot of success. We outclassed these compounds with the MHCs for clinical development.
But in the end, it really, we spent about $150 million and realized that we were not going anywhere in the research that we were doing, and it kind of bounded down 2009, 10. And after that, we looked at incremental innovation, actually taking existing molecules, making them better through formulation innovation. We got six products up, and we launched them in the US.
Unfortunately, we had to struggle to get reimbursed, and the whole financing was not adding up, and then we had to sell that business. And after that, we started a services company, now 2004, Origin Discovery Technologies. And that somehow morphed into an oncology research company with a fairly deep pipeline of about 10 small molecules in immuno-oncology and in the clinic at various phases.
And we still don't have visibility to attract our almost 30 years of effort. So I just want to highlight how difficult it is to innovate and innovate in a system which is very nascent in its evolution for drug discovery. And that's the reason I said it's a little presumptuous to say global leading the global charge on innovation from India.
Going to Harvard, but look, the other part is you asked for what could be the moonshot goal for innovation. The government has already declared they want to invent or discover 100 NCEs, NMEs, by the year 2047. This is a stated goal now.
So that itself should spur the note of innovation. Well, having said that, as an industry, we are very good in process innovation, process development. We actually are leaders in API development, in generic development, biosimilars, services, and we've really become a force in that.
And we shouldn't discount that. Of course, innovation is a much bigger challenge, but I think we should be proud of what an industry has achieved in the last few decades and certainly we are globally competitive. India is known as a reliable source for all these ideas.
And that is something we all should thus widely feel proud of. Now, going to innovation, innovation is not a linear journey from API to generics to innovation. Like people say, moving up the value chain, but this is not a continuous value chain.
It's a very different business. The risk profile is very different. Generics, you have a large number of small pegs, each application, maybe 3 million, 4 million, and 5 million.
But for a drug to see the market is hundreds of billions of dollars, billion dollars plus. So it's a very different game. We can do some initial discovery, then partner, then develop with many ways to get there.
But no Indian company has the bandwidth or financial ability to take a drug, discover it, and take it global across all phases of development. It's just very large. And a company which is, most of our companies are valued for the profits they make, the valuation is a multiple of your earnings per share.
So if you look at that from that perspective, the more you spend on research, the less you'll devalue because nobody gives value to the pipeline in this country. So there are so many such obstacles. But again, the price is worthwhile.
The price is worthwhile. If you have a successful drug in the market at a global level, not at the Indian level, the payoff is amazing. It's a platform.
The company from where it is to multiples of where it is. So it's a difficult challenge. It requires a lot of effort, like culture and set focus, tenacity, persistence, ability to take Indian intelligence risks.
And it's right that there is a lot of uncertainty. In spite of all the artificial intelligence people are talking about, the human body is not well understood. Routinely chain of well-speak, that's why the contracts.
And how many companies have lived there without observing the failure of a phase three drug? And that, I think, is a defining challenge for us. It's a great aspiration to have.
Certainly the high-tiered world. India is otherwise financially stronger. There's a lot of risk capital available.
Talent is coming back. And we do need it to come back. So with all this, I think it's a worthy challenge.
It's a moonshot. The Serpentine Light Lamp is a moon. And if you say what is such as it is discovering a drug with the labs in India and launching it globally.
That should be the moonshot. We should pay. And the government said we should start 100 pairs.
But the challenge is not in discovery. It's in phase one, phase two, phase three. Let's make a global trend.
Govindraj Ethiraj: Let me interject a quick question before I come to Dr. Somnath. So what would Dr. Ranji Reddy had been thinking in 94 when he took on that challenge?
G. V. Prasad: Well, you know, he's written his biopsy. Soul story of his life. He was so passionate about the story.
He was a scientist. He was an entrepreneur. He had that passion for science.
The biography is called The Unfinished Ajarya. And here I am, 64 now, and I'm still struggling to complete the unfinished Ajarya.
Govindraj Ethiraj: But he, so you're saying that he did not have the same sense of concern about, let's say, quarterly results and such pressures as you have today?
G. V. Prasad: No, so for him, it was his life story, passion. But he wanted to take a breath from the story to global thoughts. He didn't need it to be done.
He'd done it with one partner. Unfortunately, he didn't see it in his lifetime. I hope I can see it.
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India should take a page from the playbook of countries such as China and Australia if it wants a larger share of the global clinical trials market, according to health care experts at BioAsia. Data from consultancy firm PwC said that as of 2022, India held an 8% share in global clinical trials compared to China's 29%, the US 25%, and 38% for the rest of the world. A BCG partner said that there's a lot to learn from what other countries have done to make them clinical trial destinations.
Clinical trials are used to evaluate the safety and effectiveness of new treatments. China apparently saw an increase in innovation after easing regulations, while Australia benefited from offering tax incentives.
Indian Electric Cars Fan Moment
Yesterday, we spoke about how Tesla could have a tough time in at least the earlier phase of its India entry, given the fact that some of its models that are likely to come to India are going to obviously be priced pretty high. That's one. Second is that it's not going to be a grand entry.
There is no real service network, and the likely sales of those cars will happen as of now only in Mumbai and Delhi. On the other hand, Indian manufacturers are responding already. Mahindra, for example, and its electric origin SUVs, the XE V90 and V6, have already secured something like 30,000 bookings, which is a little less than one third of the entire market for 2024.
Interestingly, India's G20 Sherpa and former NITI Aayog CEO Amitabh Gantz says that India has a very good chance in the electric vehicle sector. He said that domestic automakers like Tata Motors and Mahindra will ensure that Tesla does not dominate the Indian market. And he also said that not only are Tata's and Mahindra's and their products prices very competitive, he revealed that he himself had switched to an electric vehicle, and he's just booked a Mahindra electric vehicle, which brings us back to those 30,000 bookings, and presumably he's one of them.
Speaking at a business standard event, he also emphasized the need for India to become a global champion in EV manufacturing, particularly in two-wheeler and three-wheeler segments, where it has a strong export base as well as a strong presence in India. He also said that every Indian should move to an electric vehicle, and the government should not buy any fossil fuel cars, and the government should become the first driver of EV adoption.
The Trump Gold Card
US President Donald Trump, as we discussed yesterday, has announced a new immigration scheme, the Gold Card, which offers wealthy foreign investors a fast track to US citizenship for about $5 million or about 43 crore rupees. And this is set to replace the existing EB-5 visa, which requires about a million dollars of investment and the promise of creating at least 10 jobs in the United States. The EB-5 was created in 1992 and could grant green cards for those who invested in economically distressed zones called targeted employment areas and to create jobs for American workers.
I reached out to Varun Singh, director of CFIA's immigration, who has helped to settle about 10,000 families outbound, and I began by asking him whether the Gold Card would work for Indians in the larger context of where Indians were headed, particularly in 2025.
INTERVIEW TRANSCRIPT
Varun Singh: Today's update has really set back a lot of turmoil in the Indian investors because it was not expected that it will go five-fold. See this 5 million USD investment, this is not that open, but in New Zealand and in Australia and in a few European countries, the passport and citizenship option is already there up to that price. Okay, but in the US, for Indians, it's a top dream and setting up 5 million USD as a benchmark, anyways, in India, none of the investors can do this from India.
It's impossible. The LRS, the RBI, never allows you to transfer more than $ 250,000 for investment or buying a property. There is no such option available in the RBI portal for the bankers to go in and take an eligibility to transfer your fund from your bank to any US entity.
It's impossible. There is no option, sir. Right now, in the last 10, 15 years, property appreciation has happened in India. A lot of families have made money from their parental property and for the capital gains.
So this may impact the expats and NRIs who are living outside the US and outside India. For them, it will be an easy option if this looks at the technical and the feasibility of the financial arrangements. Otherwise, this 5 million part, being an Indian, sitting in India, you cannot do this.
There's no way that you can get into this $5 million golden card. This may affect and this may open the other verticals for other golden visas. Now, the most prominent is Dubai.
Now, Dubai, everyone is choosing. Now, this has a hope, a step ahead for taking your next milestone. So Dubai enables you to have your residency and then enables you to have a freedom of legality and also the accounting, and that helps you to have your next milestone.
So looking, if US dreams are there, then it has to go via Dubai or it has to go via Europe green cards or golden visa. So European golden visas are very common in India and Portugal, Greece, Malta, Cyprus. These countries have been very popular in the last five, seven years.
And the investment starts from 2.5 crores Indian rupees. This is within the LRS scheme. So in the LRS scheme, even a husband and wife can do 500,000 in one financial year.
And next financial year, you can do another 100, 500,000. So this March closing and April closing becomes a very prominent month for all our investment consultants and investment industry because of these restrictions. So I believe this is going to open a new vertical.
He has made a new benchmark. The benchmark is very high. And of course, the rich and wealthy Indians or immigrants can only migrate to the US.
And finally, they will also see, this is for the investment, but there were a lot of interviews happening in terms of the talents and the skill sets. So talents and skill set visas are already there. The categories are already there.
So this move has been done to fix the deficit of the federal government in the US. And that's how we can get a lot of capital. And this is the trend throughout Europe.
You see Caribbean countries. And they're such tiny countries. They have billions and billions of economies because people want to buy their passport to have a tax haven and to have a tax benefit.
And this is how this trend came.
Govindraj Ethiraj: The earlier structure of EB-5 that involved, it was an investment as in you invested and you created a business, which is conceptually different from saying that buy a green card for $5 million. So my question is, what would, I mean, the Indians who want to move to the US, I mean, that you've seen, would more of them want to actually set up businesses or were they only using this route because that was the only available route?
Varun Singh: This was the only available route because this was a passive involvement. Okay, now the passive involvement, the only two conditions was that you need to have 10 employments to be generated. Either you can go and open your business and hire 10 people and reach that benchmark of investment in your company.
You can apply for your green card directly. But that is a very tedious process and it takes its own time. And if you see the collateral of this hiring and then setting up, all this takes little time to get your process into the green card.
So a lot of Indians and other families, they used to see this as a very defined channel because the investments were going on approved investment projects. Now, these investment projects are already having a buffer of employment generated and your share of your EB-5 is a very small portion. So this was a very easy route.
This was predefined and this EB-5 has been running for the last 30 years. In India, it has become famous in the last 10 years because everyone wants to send their kids for F1 visas for studies. But now the trend is changing that, okay, even after sending off for studies, your child has to struggle for seven to 10 years to get the green card.
And even that is not sure. So that's why the families, they started putting money back in that country because this is going to come back. After six years, five years, you have a condition that your employment is generated, your investment is invested.
Now you can get the money back. And this is just five years where you get the money back, you get your green card, your price for your green card becomes zero. This is how a lot of families from South India, from Gujarat, opted this as an investment, as an FD for five years, and your return is your green card, not your monetary returns.
So monetary returns are there. But of course, this is setting up a new benchmark.
Govindraj Ethiraj: If you look at what's the environment today, I mean, where let's say the United States is obviously becoming a more difficult country to migrate to. And I'm talking about legal migration, or for that matter, even H1B visas. And other countries, including Europe, are tightening as well.
Canada is tightening, Australia is tightening. So how are you seeing the environment right now? I mean, where do you see people going?
Where do they want to go? What is feasible?
Varun Singh: The scrutiny is very important, Govind. You know, there are a lot of changes which people take, misuse the clauses and the clauses in the system. If immigration process and protocols are becoming strict, it is very good for us as a professional, because we see it as a very defined and robust option.
Right now, if you see the last six months, one year, every family has struggled to get an appointment for a simple tourist visa or any visa. And there were flaws for digging up, keeping up to the agents to get the appointment. See, illegal migration is a different story.
I don't understand how it works, because it's all through the border and the leakages through the borders, filtration through the borders, not through the system. System that never allows you to file the application without having your police clearance certificate. If you have done any cases or you have some issues, you can't pass your scrutiny or the due diligence.
So I see it as a profession, as a very good thing that yes, reforms and changes and technical infusion should happen, because we see there are a lot of gray areas which need to be fixed. And the technology can help to reduce the turnaround time and the experience of the users and the families who are living there in a dilemma about the delays of the visas. So according to me, this migration option is happening right now, this is a very positive sign and looks positive.
Govindraj Ethiraj: Anyway, so how do you see 2025? I mean, what kind of trends are you seeing as things stand? And from what we see happening around the world, do you see less Indians attempting to migrate even for, let's say, the Dubai kind of locations?
Varun Singh: So you go in, in the last 15 years, this trend is not going to stop. Last 140 years, last 50 years, it has never stopped. It will never stop in the future also.
So this migration is a trend. People, family, companies, they move for their better life, for better career, for better earning. This is something which has been happening for ages and decades.
Only the thing is, if the benchmark they are setting up is a little different, things will change. And 2025 is already one month, a lot of changes have happened. Greece has changed, Spain has changed, Italy has changed.
There are a lot of changes happening and we are seeing these changes and on a very positive note. And I see it as also, this is a very challenging year because of a lot of setbacks in terms of people who are financially ready, now they cannot go because of uncertainties. But then we have to give clarity, confidence, and that is how we take the families on board.
And this all means that we do the right guidance so that you don't go and end up in a wrong operation, in a wrong consultation. So this is how things are very important. But yes, they choose the right consultant and choose the right program, your preference, your priority defines the entire pathway.
So it's not just for the sake anyone can put 50 crores in US, unless you have your preference for it. This is how I believe there's a preference and behavioral and psychological driven industry. And of course, geopolitical infusion also drives the industry.
So things will change when good governance comes, good leadership comes, then things will look positive.
Govindraj Ethiraj: Right, Varun, thank you so much for joining me.
Varun Singh: Thank you so much. Thank you, nice talking to you.
Air Cargo Growth Slows Down
The International Air Transport Association has released data for Jan 25 global air cargo markets showing that there has been a roughly 3.2% increase in demand compared to Jan 2024. And of this about 3.6% is for international operations. This also makes it the 18th consecutive month of growth.
On the other hand, while January signified 18 months of growth for air cargo, the 3.2% figure is a moderation from the double digit figures and peaks of 2024. Similarly, IATA says that while yields that were still above the Jan 2024 levels saw a 9.9% or close to 10% decline from December as cargo load factors also declined by an average of 1.5 percentage points. Now, this could also be because of the high base, but it could also signify some shifts or imminent shifts in the way global cargo is likely to move in coming months.
But also remember that there was a lot of stacking up ahead of potential tariffs by the United States on countries like China.
