The Stock Markets Fight Back A Fresh Bout Of Selling
The bulls fought hard on Wednesday, January 8 but were not successful eventually
On Episode 476 of The Core Report, financial journalist Govindraj Ethiraj talks to Bjarne Schieldrop, Chief Commodity Analyst at Oslo headquartered SEB as well as Pratik Shah, Managing Director for India and SAARC at F5.
(00:00) Stories Of The Day
(01:00) The stock markets fight back a fresh bout of selling
(03:27) ONGC ties up with BP to boost oil drilling output, the IEW segment
(09:50) Indians love gold but did not import as much as we thought last month as the Govt revises figures
(11:48) Will new tax laws be simpler?
(13:13) How security threats for APIs, which link almost all our financial transactions are rising
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 Thursday, the 9th of January and this is Govindraj Ethiraj, headquartered and broadcasting and streaming like always from Mumbai, India’s financial capital.
The top stories & themes
The stockmarkets fight back a fresh bout of selling.
Indians love gold but did not import as much as we thought last month as the Govt revises figures.
ONGC ties up with BP to boost oil drilling output, the IEW segment.
Will new tax laws be simpler ?
How security threats for APIs, which link almost all our financial transactions are rising
Markets / US Markets
The bulls fought hard on Wednesday, January 8 but were not successful eventually.
Nevertheless, the indices recovered after several swings with the BSE Sensex pulling up 650 points from its day's low to settle at 78,141.06, down 58 points.
To give you a sense of the swings, the Sensex traded in the range of 77,486.79 - 78,319.45 today.
The NSE Nifty50 too closed down at 23,688.95 with losses of 19 points.
Among the broader markets, Nifty Midcap100 ended down 1.05 per cent at 56,270.60 , while Nifty Smallcap100 ended down 1.65 per cent at 18,365.65.
Very broadly, the BSE Sensex has fallen around 2,500 points or 3% in the last four trading sessions which obviously indicates that the overall tenor of 2025 at start is still weak or muted with no clear signals on the horizon.
The only signal that lies ahead of course is more stress on the trade front as Donald Trump’s presidency approaches, with the inauguration set for January 20.
The domestic signals are of course the third quarter results of companies which may see some bright spots but do not look like they will surprise on the upside as such.
The other trigger of course, going by tradition, is the Union Budget set to be presented on February 1.
While you can gear yourself for 10/10 stars from Indian industry regardless of what is said or told, the only thing that can really make a difference will be tax cuts, personal income tax ideally.
Which in the larger scheme of things seems unlikely given that the economy is slowing down and the Government’s capital expenditure levels have dropped.
Nevertheless, that is one trigger. The income tax system could see some much needed overhaul and will help everyone but not enough to fire up the markets. More on income tax shortly.
Wall Street is looking weak right now and Tuesday saw a fairly large sell off of the bond market, also the world’s largest, on speculation the Federal Reserve won’t cut interest rates before July amid inflation risks.
A selloff in big tech weighed heavily on Wall Street trading, with the S&P 500 down over 1% and the Nasdaq 100 falling almost twice as much, CNBC reported, adding that Nvidia Corp. sank 6.2%.
Treasuries fell across the curve, with a $39 billion sale of 10-year bonds drawing the highest yield since 2007.
ONGC and BP Join Hands
And our special energy segment supported by the India Energy Week.
India's top oil exploration company Oil And Natural Gas Corp on Wednesday said energy major BP will act as technical service provider to help boost oil and gas output from the country's largest producing field, off India's west coast.
BP has promised an increase of up to 60% in production of oil and gas output from the Mumbai High field, discovered in 1974, ONGC said in a stock exchange filing reported by Reuters.
The field reached a peak production level of 471,000 barrels per day of oil in March 1985, and its output had declined to about 134,000 bpd in April 2024, according to the tender document floated last year.
India is also the world's third-biggest oil importer and consumer depends considerably on imported crude, more than 80%.
Rising oil prices or a depreciating rupee obviously make it more expensive to import, as is the case right now.
In June, the government said that ONGC was seeking a technical tie-up with a global oil major to boost production and BP's board had met India's Oil Minister Hardeep Singh Puri in September 2024.
The country has been asking foreign companies to participate in India's exploration programmes, the Government had said, according to Reuters
As action picks up in the new year in the oil and energy space, I also reached out to Bjarne Schieldrop, Chief Commodity Analyst at Oslo headquartered SEB and began by asking him how he was seeing oil prices at this point.
INTERVIEW TRANSCRIPT
Bjarne Schieldrop: You know, I mean, the latest data we have on demand in China is December, right? And basically, you know, the indications we got from China is actually quite weak. So they were building inventories.
They imported more crude in November than the month before, 1.3 million barrels. At first sight, it looks very bullish that they import more, but most of that went into inventories because demand wasn't strong enough. And the reason why they imported more was because refineries got to borrow voters for 2025 to import crude at lower prices in 2024.
Govindraj Ethiraj: Right. Apart from the China factor, what are the other factors that are playing on oil prices right now?
Bjarne Schieldrop: That is the interesting thing. I think everyone had expectations of 2025 being a weak year, a challenging year, a challenging year for OPEC plus holding the price steady. But instead, we've seen actually the oil price rally into the new year, reaching $77, close to $78, with the 100-200-day moving average at $79.
So I think it has taken many by surprise. So what we see is that the crude market actually looks to be quite tight, both in December, stronger than in November, and also into the new year. And part of that is probably due to the fact that Russia is exporting a very low amount of crude, or at a 16-month low now at the start of the year, helping to tighten up the crude market.
But we also have seen that U.S. crude inventories have fallen quite strongly, though the product story is different.
Govindraj Ethiraj: Right. And one of the reasons, I guess, is the colder winter in Europe and North America. So when that stabilises, could prices ease off again?
Or are there any other factors that are playing here?
Bjarne Schieldrop: Yes, I think definitely colder weather helps to drive demand for heating oil. And as such, it has helped to drive stronger gas oil cracks to some degree. But still, when you look at developments in oil products, they're not all that strong.
So I think it's more specifically on the crude side that we have this tightness into the new year, rather than, but of course, you know, additional demand for heating oil is helping the oil price and the oil complex.
Govindraj Ethiraj: Right. And how are you seeing oil prices into, let's say, February, March, or the second part of the first quarter?
Bjarne Schieldrop: You know, the funny thing is that when you look at consumption through the year, we know that consumption in the first half of the year is maybe a million barrels per day softer than in the second half of the year. So usually much stronger demand and consumption in the second half. But still, historically, you see that prices are in general rising during the first half of the year and then declining in the second half of the year.
So, you know, the start of the year this year, we see it follows that pattern exactly the same. But, you know, that it's very, very early days for this year. But we are a strong believer that OPEC will be able to, OPEC plus though, will be able to control the market very nicely and keep prices steady.
We do believe that there is a limited upside since OPEC plus has so much spare capacity at hand. And they also do want to put that part of those volumes back into the market.
Govindraj Ethiraj: And that could keep prices off. So last question, Bjorn. So water risk premium was a key theme in 2024.
And how are you seeing it right now, given that we've seen some favourable developments in the You know, I haven't really been a strong believer in a big war premium on the oil through the second half of the year.
Bjarne Schieldrop: But what is more important is Donald Trump becoming president in the US with promises of more sanctions towards Iran, harder sanctions towards Iran, most likely. And that could limit exports of crude out of Iran and help to stabilise the oil market, allow the rest of OPEC plus to put more volumes into the market. You know, so I think it's more that kind of elements rather than war disruptions being the key for supportive markets.
But if you look at sort of prices for oil, I mean, we could easily move into $80 to $90 if we have continued strength in the crude market. If you just look at the backwardation we had in the Brent crude VTI and Dubai last year, you know, it doesn't take much to drive it into $80 to $90. All right, Bjorn.
Govindraj Ethiraj: Thank you so much for joining me.
Bjarne Schieldrop: Thank you very much for having me.
This segment was supported by India Energy Week 2025 scheduled from February 11-14, 2025, in New Delhi and you can register for the same using the link in the show notes.
India Actually Imported Less Gold
There was much shock and surprise when Government figures had earlier said that we imported close to $15 billion of gold in the month of November.
This figure obviously twisted the balance of payments numbers as well since it appeared that we were importing more overall than before.
Obviously there was much speculation, including on The Core Report on India’s insatiable hunger for gold.
Turns out that the gold import numbers were wrong.
The government has revised downwards the gold import data for November to $9.8 billion, a sharp reduction from the earlier announced figure of $14.8 billion, Directorate General of Commercial Intelligence and Statistics (DGCIS) data quoted by Business Standard said.
The $5 billion revision was attributed to a ‘calculation error’ caused by alleged double counting of gold shipments in warehouses following a change in methodology in July.
The commerce department has not yet issued an official statement on the revised data.
Since imports are lower, India’s trade deficit by $5 billion, reducing it to $32.8 billion in November from the previously reported all-time high of $37.8 billion.
Staying with gold, India is the world's second-largest consumer and imports heavily to meet most demand, which typically increases during the festival and wedding season in the December quarter.
Despite the revision of November numbers, the country spent a record $47 billion on gold imports in the first 11 months of 2024, surpassing the $42.6 billion spent during the whole of 2023, as gold prices jumped to a record high , Reuters quoted the data as saying.
New Tax Laws
The Government has promised to simplify income tax filing rules to make it less tedious for taxpayers to comply with the law and help cut down on disputes that have gone past $120 billion over the past decade.
A proposed revamp of the Income-tax Act of 1961 is currently being finalized and will likely be issued for public consultation around mid-January, Reuters reported.
The Government and the Finance Ministry had started inviting suggestions for the revamp in the Union Budget of 2024, or in July last year.
The revised legislation could be released in the government’s budget, expected in early February.
Changes involve simplifying the language and rationalizing information by using formulas and tables.
Tax disputes have more than doubled to Rs 10.5 trillion ($123 billion) in the decade through the fiscal year ended March 2023.
Reuters says the proposed changes could include
Complex income computation structures to be replaced by formulas
A single definition of tax year to replace the current practice of assessment year and financial year
Tabular depiction for identical taxpayers for easier understanding
Reducing the number of additional forms taxpayers need to submit with their tax returns and making them available online.
The API Attack
You have quite likely heard of API, or Application Programming Interface, which is a set of rules and protocols that allows applications to communicate with each other.
There are APIs which allow you to buy a railway ticket or an Indigo or Air India ticket on lets say Makemytrip or do a Unified Payment Interface or UPI transaction from a Google Pay app.
Or an ecommerce transaction which links your bank account or credit card to the ecommerce player.
APIs are more prevalent in our lives than we think and are thus also the gateway to cyber attacks of all kinds, intensifying in the age of artificial intelligence.
API-based attacks have surged.
Recent data via Seattle-headquartered cloud security company F5 Networks suggests that 92% of all mitigated attacks in the past year were API-related, up from 70%.
What software creates, software tries to cure also obviously.
To understand the scale of API linked security problems and how organisations and individuals should be thinking about it, I reached out to Pratik Shah, Managing Director for India and SAARC at F5 and began by asking him to define why APIs linked attacks are a matter of concern.
INTERVIEW TRANSCRIPT
Pratik Shah: Coming specifically to the question that you mentioned, you know, let's look at the economy that we are living into, right? It's an API economy. API are no longer just the technical interface, it's actually the language of innovation.
It is also how organisations are building partnerships, scaling their ambitions and in turn creating an entirely new industry. Like, you know, you would have seen so many new startups building a particular use case and completely digital, completely API-first architecture that they have, right? So if you see for modern businesses, APIs are the new architectures and in 2025, you know, they will, APIs will, you know, further determine whether the digital economy will thrive or crumble, right?
Because if you look into the nature of APIs by default, the nature of APIs is very much revolutionary, but it's also what it makes them more vulnerable. The reason it becomes much more vulnerable is the open doors. The open doors to interact, the open doors to share and create something which is, you know, it could be a new industry, new use case, etc.
That also means it's an opportunity for, you know, bad actors to exploit those kind of, you know, open doors, right? And it's also just not about cyber attacks, it's also about the erosion of the trust that is fundamental to the digital business as such, right? So, and we have seen, you know, there are so many beats in the recent times, especially API-related breach.
Almost, you know, we have seen 3000% increase in API attacks over last, you know, two quarters. And in fact, more than 85 to 90% of the traffic revolves around API traffic. So that's how critical the nature of API, you know, traffic is in the modern, you know, API economy.
Govindraj Ethiraj: So when we talk about this interconnect of APIs across, let's say, businesses or the way we use or we transact, what are the biggest examples or the most prominent examples where, let's say, there are two sets of systems talking to each other through APIs and therefore why they are so vulnerable?
Pratik Shah: As you would have seen, you know, if you look into the state where most of the businesses are, it's truly hybrid in nature, you know. The organisations have kind of repatriated their workloads from public cloud to a different environment because of many issues. It could be complexity, data sovereignty, or it could be even the cost pressures as such, right.
If you see, you know, this workload or the data for this particular workload is still fragmented. It could be on cloud, it could be on the edge, or it could be on-premise, etc. An API acts as a single glue to connect this, you know, fragmented data systems, right.
It is very, very important that APIs are secured enough to serve as a foundational for everything that, you know, that requires, for example, AI workflows or the real-time data exchanges and things like that.
Govindraj Ethiraj: So, what would be the most prominent, let's say, area or, let's say, business where you think the API or the chances of API failure are high today?
Pratik Shah: If you look into some of the recent attacks that have happened in the financial services space or for that matter even healthcare, right, by nature of the dynamic business environment, they expose APIs. Their business revolves around, you know, exchanging APIs with third-party, with supply chain vendors, with partners across the industry. For that matter, even travel and insurance could be a big vertical where they expose those kind of APIs for parties to exchange data and share and create something which is valuable, right.
So, some of the industries answering your question, financial services including insurance, definitely pretty big and even healthcare and the pharma industry is also pretty big when it comes to the API exchanges.
Govindraj Ethiraj: And what are companies like yours doing now to try and protect this and where do you start? I mean, because I'm assuming these APIs sit on systems that are already running in these large companies which are also protected maybe by other cybersecurity solutions. So, where do you come in and or rather how do you come in?
Pratik Shah: All right. So, I'll talk about the traditional defences first and then, you know, come to specifically what FI does. The traditional defences, when we talk about the defences like fire network, firewalls or cloud security solutions or WAFs, in general, are able to, you know, provide some kind of defence when it comes to application or network level of attacks, okay.
And then, you know, there are modern businesses which also deploy API gateways which allows them to kind of, you know, authenticate, rate limit the API exchange and as such, right. But the biggest problem that is seen is around the shadow APIs, about the undocumented APIs, about the vulnerabilities in the APIs which creates a whole new dark spot, right. And hence, it's important that there are tools available.
There should be some kind of tools that allows them to look into the API holistically in terms of, you know, starting with API discovery. It also is important to have a continuous vulnerability, you know, testing of all of these APIs because an unsecured API is as good as a big dark spot in the environment, right. If you look into the cyber kill chain, right, there's multiple steps of cyber kill chain.
But an access to an unsecured API could be a killer shot for the, you know, bad actor, right. It can also lead to data exploitation. It could lead to some kind of, you know, data theft.
It could lead to a lot many other consequences because of the unsecured APIs. A company like F5 is with a mission to protect each and every API wherever they are. And that's the mission that we have been completely focused into, irrespective of workloads being on a public cloud, on the microservices or at the edge.
And with the advent of AI, as you know, AI has been a revolutionary technology and a lot of AI workloads will actually work on the fundamental of APIs, right. Most of these are microservices architecture. APIs is the real medium to communicate.
I believe that F5 is placed extremely well in this hybrid state where we can protect each and every API irrespective of where they are.
Govindraj Ethiraj: Right. And you've talked about how, of course, in this interconnected world of business where people share and I'm assuming you talk when you talk about travel or hospitality, we can see that. I mean, I go to a, let's say, a website.
I can, I mean, I'm booking a room in another, you know, hotel chain and therefore someone has opened an API for this aggregator to enter that and so on. So that's really how the world is going. Is there something that could change or is there any other sort of mega trend that you're seeing in, let's say, in the coming year or so, which people need to be either careful about or welcome or worried about whichever way you look at it?
Pratik Shah: Let's talk about AI and the kind of, you know, implications of AI. Like I mentioned, you know, a lot many cybersecurity vendors are powering their cybersecurity solutions through AI, which we call it as AI-powered cybersecurity solutions. It's equally important to understand that the access of AIs is also with the bad actors, right?
They can leverage those kinds of tools available to create sophisticated payloads that can have a meaningful impact, right? It is, you know, basically the shift has to happen in the mindset from defence to offence. All this while the conversation around cybersecurity was often focused on risk avoidance.
In the API economy that we all are living, API security plays a very competitive advantage. Like you give an example of a travel or an aggregator for that matter, right? It allows them to create something which is basically, you know, opens up the opportunity to innovate and scale, right?
There are so many companies formed on the journey of innovation, on the journey of scale only because they have a secure API framework because they are API first company, right? So it also gives partners and users like us to have greater confidence to collaborate and to work with them. It also allows to build the ecosystem that the economy depends upon.
Govindraj Ethiraj: Right. Pratik, thank you so much for joining me.
Pratik Shah: Likewise, my pleasure to talk to you.
