The Markets Recover on Positive Indian Data
You would think that the day China announced it would fight to the end, the markets would sink further
On Episode 552 of The Core Report, financial journalist Govindraj Ethiraj talks to Professor Leon Laulusa, Executive President and Dean of ESCP Business School.
SHOW NOTES
(00:00) Stories of the Day
(01:00) The markets recover as bargain hunters return to focus on positive Indian data
(05:07) Goldman Sachs projects an extreme oil scenario of $40 a barrel
(06:19) US CEOs find their voice and rail against tariffs
(07:28) MBA in the time of tariffs, views from a top French business school
(18:18) Indian CEO salary hits Rs 10 crore despite all the turmoil
(19:18) Heatwaves are increasing in India and elsewhere in the world
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 Wednesday, the 9th of April, and this is Govind Raj Yathiraj, headquartered in Broadcasting and Streaming from Mumbai, India's financial capital. Our top stories and themes,
The Indian markets recover as bargain hunters return and focus on positive Indian data.
Goldman Sachs projects an extreme oil scenario of $40 a barrel.
U.S. CEOs find their voice and rail against Trump's tariffs.
An MBA in the time of tariffs and views from a top French business school.
Indian CEO salary hits the 10 crore mark despite all the turmoil.
And heatwaves are increasing in the country and elsewhere in the world.
The Markets Come Back
You would think that the day China announced it would fight to the end, the markets would sink further. Quite the contrary, the Asian markets were up on Tuesday, probably also helping lift the Indian benchmarks after a three-day losing streak. Maybe the markets like a show of confidence, which China is clearly demonstrating, even as President Trump piles on tariff upon tariff.
Trump appears confident too in his actions, though Wall Street seems less forgiving, except on Tuesday morning, things were looking a little better. Incidentally, total tariffs on Chinese goods into America at this rate would cross about 100%. Back to the Indian markets, on Tuesday, the 30-stock Sensex settled at 74,227 and was up 1,089 points, while the nifty 50 was up 374 points to close at 22,535.
In the broader markets, the BSE mid-cap and small-cap were up about 1.87 and 2.18, so around 2% each and respectively. The gains were mostly led by financial stocks and also included consumer products, information technology and auto realty amongst others. There are a few things working for India.
First is that India is relatively insulated from tariffs, at least compared to many other export-facing economies, including in Asia, as we've discussed in the past. Second, oil prices are falling. And given that we import 85% of our crude oil import needs, that helps keep our import bill down.
And if prices are transmitted to consumers, then also inflation could come down further. And the Reserve Bank of India is set to cut interest rates further today in its credit policy. And finally, on Wall Street, the mood was better on Tuesday, with stock futures looking stronger by over 2.5%. Treasury yields were high as well and the WSJ, that's the Wall Street Journal dollar index, was down. Back home, an interesting stock stood out. Interglobe Aviation, which operates Indigo Airlines, hit an all-time high of 5,199 in this market, even as it went up 4% on the Bombay Stock Exchange. And the stock price has now gone up about 32% since January 22, after it reported a better-than-expected 14% year-on-year growth in revenue in the October to December 24 quarter.
When I say Jan 22, I mean the 22nd of January. Indigo has a market share of 62% and 437 aircraft, according to this report from Business Standard. Now, this of course means that travel trends are still steady to strong, or at least were in some segments, and the market is still separating the winners.
Now, the larger question could be whether travel and international travel will stay strong for the coming quarters. Now, going by reports, including how some of the U.S. airlines are faring right now, it looks tough, as travellers in the Western world are starting to cut back for reasons ranging from a slowing economy in the U.S. to reports of friction at the borders. Canada sent some 20 million tourists to America in 2023, and that is also the largest contributor.
Bookings through September this year are down 70%, according to Travel Research House OAG. While bookings from Europe are down 25%, Bloomberg quoted a hospitality industry person saying. After Canada came, the UK had about 3.9 million tourists in 2023, and India for that year was about 1.9 million. Arguably, 2024 figures would be higher, but 2025 is what one has to see. Now, speaking of the U.S., Bloomberg is reporting that warnings from Wall Street strategists are piling up. BlackRock strategists downgraded U.S. equities on Monday to neutral from overweight on a three-month horizon, saying they expect more pressure on risk assets in the near term, given the major escalation in global trade tensions. A strategy team at Goldman Sachs said the equities sell-off could well turn into a longer-lasting cyclical bear market as recession risks mount. Cyclical bear markets typically last about two years and take five years to rebound to their starting point. Unlike one-off event-driven shocks, they are a function of the economic cycle, Bloomberg reported, the Goldman strategist saying, and adding that they view the current sell-off as an event-driven bear market.
Either way, stocks tend to suffer average declines of 30% in both kinds of bear markets but differ in terms of duration, with event-driven downturns being shorter and, I guess that's quite logical, with a faster recovery profile.
Where Could Oil Prices Go?
For now, oil prices are holding just below $65 a barrel, which is obviously down from where it was even a few weeks ago. But Goldman Sachs is now saying that Brent has the outside potential to fall below $40 a barrel under extreme outcomes as the trade war continues and flares up further. And then, of course, supplies are also set to rise.
Goldman said that in an extreme and less likely scenario, with both a global GDP slowdown and full unwind of Organisation of Petroleum Exporting Countries, or OPEC+, cuts which would discipline non-OPEC supply, they estimated that Brent could fall under $40 a barrel in late 2026. Now, clearly, one big surprise has been OPEC+, which is set to ramp up supply at a time when demand is poised to shrink. Other banks like Morgan Stanley and Societe Generale have also cut their base case oil price forecast as well as for exploring less likely bearish and bullish outcomes, as is common in commodity forecasting, Bloomberg said.
Elsewhere, gold is up again. It actually fell after hitting records last week and is currently around $3,026 an ounce.
American CEOs find their voice
The reality of a global trade war is starting to push corporate bosses to do what they've tried for months to avoid, criticizing President Trump's policies.
In the days after Trump announced the tariffs last week, CEOs mostly channelled their frustrations privately to trade groups and lobbyists. Now, after the three-day market sell-off and warnings from Wall Street biggies like Bill Ackman and Jamie Dimon, more business leaders are openly voicing concern, according to the Wall Street Journal. Bahram Akhradi, CEO of the high-end fitness chain Lifetime Group Holdings, said in an interview on Monday that tariff is not a beautiful word.
I disagree with that. We are in a global economy. This cannot stay.
You cannot apply this kind of gridlock and this much friction to the world's trade. Meanwhile, China responded strongly to President Trump's threats to impose an additional 50 percent tariff on China as blackmail. The U.S. threat to escalate tariffs on China is a mistake on top of a mistake, China's commerce ministry said in a statement. China will never accept it. If the U.S. insists on its own way, China will fight to the end. That response came as markets in Asia-Pacific opened with cautious optimism, said Wall Street Journal.
Turning Point, Or Just A Blip
After years of decline, the number of applications to the countries, that's the United States, two-year MBA programmes rebounded in 2024, rising 19 percent, according to a survey by the Graduate Management Admissions Council. The pandemic saw a burgeoning of new ways to deliver that MBA, but tradition has come back. The biggest growth was in conventional two-year and part-time programmes.
While total applications to in-person, part-time programmes increased, more than half the programmes actually reported declining applications, meaning growth was concentrated in fewer programmes. Now, all of this is, of course, in the United States. The ESCP Business School ranks amongst the top five in Europe and operates campuses across Europe in Paris, Berlin, London, Madrid, Turin, and Warsaw, and a branch campus in Dubai, and has over 11,000 students from 136 different nationalities.
In India, it's partnered with IIM Ahmedabad, Bangalore, Calcutta, Coikod, Lucknow, Udaipur, and MDI Gurgaon, apart from the SPJN Institute. Some 600 students now from India study there, a number which has risen about 16 percent in three years, according to that school. So, what and how is ESCP future-proofing its offerings, including in areas like emerging technologies, which of course includes AI, which students will increasingly want a piece of?
ESCP recently partnered with OpenAI last year to introduce ChatGPT-EDU, an innovative platform designed to enhance learning experiences and drive AI-driven research, according to the Business School. So, I reached out to Professor Leon Laulussa, Executive President and Dean, and I also asked him, a former Deloitte partner, how he was seeing demand shifts for B-School degrees, and more importantly, how this was all shaping up in the world of tariffs.
INTERVIEW TRANSCRIPT
Prof. Leon Laulusa: Yes, Executive MBA will have the chance to be ranked number two in the world, according to Financial Times. So, for sure, as we attract a lot of international students, so you have an impact in terms of geopolitics in the programme, but at the same time, actually, we provide geopolitics courses in order to decode the world and in order to anticipate the world. So, I believe that the impact would be more on, you know, for some participants, you know, to join or not, and so it gives also opportunities, you know, for us to attract more talented participants, because probably in some countries, they will not want to go to join, and instead, they would like to go and to come to Europe, and especially at ESCP.
Govindraj Ethiraj: How are you seeing the overall response for the Executive MBA programme right now, in the context of people opting for it, and also in the context of competition, if one can use that word, from other programmes?
Prof. Leon Laulusa: I think that, you know, any programme, and especially Executive MBA, needs to evolve with the context, and, you know, at ESCP, the most important thing is to anticipate, because, you know, you could not predict what is unpredictable, you could not predict the uncertainty. So, what we did is to anticipate, so we actually, we designed a few years ago hybrid modes, meaning that you have the courses you can follow online, so remotely, and then you have elective courses you need to go, you know, on site. So, I think that this is the first thing that you have in any programme, especially Executive MBA, we need to adapt.
And the second thing, and also we need to provide new expertise, let's say geopolitics, AI, and so on. Even now, we will introduce the space economy. You see, we have to look at the future of the business, and I think this is important as well.
Govindraj Ethiraj: When you say space economy, could you define that a little more?
Prof. Leon Laulusa: Yes, you know that the future is not in terms of the business, and this is a very big potential, is that in the air, you know, that spaces, you have satellites, but satellites is not only about a technical point of view, you have a commercial point of view, you have telecommunications, data, and so energy. So, you see that when we are talking about the space economy, it includes not only the technical side, but also the management and also the commercial side. So, a lot of industries will be involved with the space economy.
That's why, first, this is important that we need to include in our programmes.
Govindraj Ethiraj: So, this would be an elective within an MBA course or larger? Right. You know, I was reading this interesting article on Bloomberg just last week, which said that our applications, this is in the US, have actually risen after many years of decline.
And according to this report, the number of applications to America's two-year MBA programmes went up by almost 19% in 2024. And this obviously is a shift in the trend because the applications are going down. How are you seeing it in Europe?
I mean, in terms of the last four or five years, let's say, or maybe even a little more?
Prof. Leon Laulusa: In our case, we have a growth each year in terms of the number of candidates. But as you said, if we are looking for more knowledge in the European business school, we can see that kind of decline in the number of candidates. But this is not new.
But I think we have to separate full-time MBA, you know, the two-year programme. I think now it's been declining more than 15 years ago each year. Whereas when you have a part-time MBA and executive MBA, which is part-time, I think it's quite stable.
In our case, you know, we even have an increase in the number of candidates.
Govindraj Ethiraj: Right. How are you seeing, or rather, what are the kind of collaborations that you're looking at or have already started working on in India? And are there any specific plans in terms of expansion or growth?
Prof. Leon Laulusa: We collaborate with the IIM, like Ahmedabad, Bangalore, Calcutta, BC, as we call them, for dual degrees. And now we'd like to extend our collaborations with IIT and IIT Madras and IIT Mumbai. Why?
Because your technology is becoming so important. So as a business school, we also need to collaborate the best in terms of technology. And as I said before about the space economy, but also AI and also, of course, sustainability, this is important to how to create new, sustainable, regenerative, circular business models.
So that's why we need to work with the best. And these two IIT, you know, India and the world are very excellent partners.
Govindraj Ethiraj: From what you're saying now, the sense I'm getting is that the MBA programme of, let's say, 2025, 26, is quite different from what it was a few years ago. I mean, you've talked about space, you've talked about AI and related technology, you've talked about sustainability. So the MBA student or the MBA product in a few years is quite different or will be quite different from maybe even five years ago.
Would that be a correct statement?
Prof. Leon Laulusa: Yes, exactly. Because, you know, before the MBA is that it's a general management programme, you know, we train you, educate you to be a leader. And so we will focus more on soft skills, leadership, and so on.
It's like a team model, you know, you have a team model that is the core foundations and then your expertise. But nowadays, and in the future, we will have multi expertise. It would not be a team model, it would be a table model or WV models, meaning that you need to acquire new expertise.
Thanks to technology, you know, you have to have lifelong learnings, and you have to acquire new expertise each time. So that's why in our MBA or EMBA programmes, we need to provide that. So I would say that's more important is to learn to learn, it's more important.
It means that to approach the methodology, of course, you need to acquire new expertise, as I say, space economy, AI, sustainability, and so on. But at the same time, you have to have a more comprehensive view, holistic view. I think this is an important thing that we need to acquire from the past years.
Govindraj Ethiraj: How do leaders inculcate that? I mean, existing leaders who are already running corporations, and I'm sure you do a lot of programmes where you're working with those who are already leaders, and potential leaders, how do you make them ready for this world? And or rather, how are you making them ready for this world?
Prof. Leon Laulusa: Actually, I'm doing research about French leaders. So that's why we need to introduce this kind of thing. Observe that three main components about the leaders or future leaders and how they can last as leaders and CEO, chairmen.
The first components, leaders, are more than a CEO, chief executive officers. They are the first, they are chief entrepreneurial officers. Either you are big companies or small companies, you have to have an entrepreneurial mindset to be able to have a vision.
Second, you need to deliver. And so they need to be chief excellence officers, you know, excellence, meaning that not only providing the outcome, but to provide the very excellent outcome services, product, etc. So you need to coordinate that.
So this is a multi-performance approach. The third, which is very important that I saw, is that you have to be chief energetic officers. You need to provide positive energy and not negative energy.
So how to bring and bring back everyone is more than motivation. You see, that's why if you combine the three dimensions, that you can be a great leader and you can last. And so that's why this is something that we provide in our MBA and EMBA courses.
Govindraj Ethiraj: You've been in the audit world. What's the future for that world looking like accounting and audit?
Prof. Leon Laulusa: I think that even, you know, in the future we'll start accountants and auditors, but the point is we need to use a lot of AI agents who will do the job for you and you need to coordinate and you need, you know, the decision to say, to certify the accounts is yours. It's not the machine. So this is a good thing.
It means that, you know, everything that's a very repetitive task would be done by the AI agents. And whereas you, you need to coordinate and to provide the mindset, you know, the values for the clients and also to make sure that the accounts are reliable and they don't have any fraud in that.
Govindraj Ethiraj: Right. Professor Leon, it was a pleasure speaking with you. Thank you so much for joining me.
Prof. Leon Laulusa: Thank you.
—
A latest survey by Deloitte India shows that market volatility has not affected the growth of the non-promoter CEOs or chief executives with their median compensation touching 10 crore rupees in the last year, that's 24, 25. And this marked a 13% increase in salaries from the previous year, according to the Deloitte India executive performance and rewards survey.
Only 40% of CEO compensation is fixed salaries, while 60% is based on performance. So it's quite likely that share prices or rising share prices have contributed to those increased compensations. Short-term bonuses and long-term incentives account for 25% and 35% of annual compensation.
The survey also pointed out that other top level executives like COOs, CFOs, CHROs, that's human resources, CMOs, that's marketing officers also got salary hikes of 7 to 11% for them, 60% of pays fixed and COOs and CFOs are still the best paid after CEOs earning close to 4 crore rupees a year last year.
Heatwaves Are On Lashing India
It's only early April, but a heatwave is already sweeping across north India. The Indian meteorological department has issued warnings of extreme temperatures across several northern states this week, including a yellow alert, which means that heat is generally manageable, but can be dangerous for babies, elderly people and those with chronic diseases. IMD's forecasts have said that states like Haryana, Punjab, Rajasthan and Gujarat are expected to see temperatures above 40 degrees Celsius, according to the business standard.
This is the first major heatwave of the season and is hitting hard. Delhi saw its first heatwave of the year on Monday with temperatures crossing 40 degrees in many parts. Meanwhile, Europe experienced its warmest March since records began as climate change pushed up temperatures to unprecedented levels, according to scientists at the European Union on Tuesday.
Globally, last month was Earth's second warmest March on record, only exceeded by March in 2024, according to the EU's Copernicus climate change service, C3, in its monthly bulletin. March continued an extraordinary heat run in which 20 of the last 21 months saw an average global temperature of more than 1.5 degrees Celsius above pre-industrial times. And last year, in case you forgot, was the planet's hottest on record.
