Wall Street's Breather On Friday Could Extend To Dalal Street Today
The week is busy with inflation numbers tomorrow though no major surprises are expected. Market watchers may be looking closely at US inflation data which of course will provide further clues and signals on interest rate cuts
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:00) Wall Street’s breather on Friday could extend to Dalal Street Today
- (03:24) Gold prices race away, demand falls in big markets like Dubai
- (06:23) Swiss watches and chocolates will be cheaper in coming years as India signs new FTA
- (08:13) It’s official, Tesla will not get special treatment for an India entry
- (10:58) Bangalore’s water crisis, why businesses have to wake up
- (22:05) It's not just AI Chips that are flying off the shelves
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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Markets Breather
Wall Street has paused to take a breath on Friday. The question is will Indian markets do the same on Monday or today?
We have been obviously reporting the breathless rally in AI stocks that has taken all the major US indices including the S&P 500, Nasdaq Composite and the Dow Jones Industrial Average to new highs. The Dow had its worst week since October, CNBC reported.
On Friday, Nvidia fell 5% in its worst session since May. Nvidia was still up 6% in the week but the fact that it reversed suddenly obviously was the surprise or the shock.
The point we have made here is that as those who follow US markets know quite well, the swings when they happen are quite substantial with 5-20% swings that are quite normal. We have seen such swings up and down maybe three times in as many years.
This does not matter so much except that when it is down, it can affect sentiment back home.
Where the benchmark indices ended at a record closing high with the BSE Sensex rising 313 points to 74,119, and the Nifty 50 climbing 115 points to 22,494.
Interestingly, the shift towards large cap and thus the stocks in the benchmark indices is gathering strength and mid cap and small cap indices are now weaker and have been so.
The week is busy with inflation numbers tomorrow though no major surprises are expected. Market watchers may be looking closely at US inflation data which of course will provide further clues and signals on interest rate cuts. Bond yields have fallen further in the US, from over 4.3% to a shade over 4%.
Not surprisingly, foreign portfolio investors have now returned to Indian markets in a manner of speaking, they are now net buyers of Indian equities at over Rs 6,139 crore.
They were net sellers of equities in the last few months. Though they have been investing in debt and are likely to step up there given India’s appearance on first J P Morgan and now Bloomberg bond indices.
But the big story is gold which has hit record highs for a fourth consecutive session on Friday, largely thanks to the same triggers from US markets.
Gold reached a new all-time high of $2,170.99 and gained more than 4.1 percent so far this week, setting it on track to post its biggest weekly percentage increase since mid-October.
According to Bloomberg, The Federal Reserve’s long-anticipated pivot to looser monetary policy is widely expected to boost gold’s appeal compared with yield-bearing assets like bonds.
Moreover, persistent geopolitical tensions in the Middle East and Ukraine have bolstered the precious metal’s role as a haven asset, while central banks, particularly the People’s Bank of China, continue to add to their holdings.
In general, most commodity traders seem somewhat puzzled by gold’s somewhat sudden ascent since there are no visible triggers to cause such a rally.
Interestingly, high gold prices, close to $2,200 an ounce, have led to a sharp drop in purchases at Dubai’s famous Gold Souk, Bloomberg reported.
Most locals are just browsing, leaving the majority of buying to tourists.
The most affected were the gold brick shops, with workers at three locations saying sales are down by half.
One retailer told Bloomberg business was down about 40% this week, with the makeup of the customers being noticeably different, he said.
Oil Prices Steady Around $82 A Barrel
Oil prices are holding steady as there were no major triggers as there have not been for a few weeks now and have tended to move in tight trading ranges.
Bloomberg reported that oil has traded in a tight band this year, with even less volatility this week, confining Brent prices to their narrowest range since September 2021.
Cutbacks by OPEC and rising tensions in the Middle East and Red Sea have been balanced by surging supply from producers outside the cartel including the US. Persistent concerns about China’s growth have added to headwinds.
A slightly different take on energy.
India's prime minister Narendra Modi announced that the cost of cooking gas cylinders would come down by Rs 100 per cylinder.
A 14.2 kg cylinder costs around Rs 900 in Delhi.
The move, just weeks ahead of general elections, is seen as targeting women voters and was aimed at easing the financial burden on millions of households across the country, Mr Modi said.
The Government also extended its subsidy for low income households after raising it to Rs 300 per cylinder from Rs 200 earlier.
Swiss Watches & Chocolates Will Cost Less Soon
World famous Swiss watches and chocolates will cost less in coming years thanks to duty concessions offered by India as part of the Trade and Economic Partnership Agreement (TEPA) struck with the four-nation European Free Trade Association (EFTA).
The agreement has reportedly been in the works for 16 years.
India levies an import duty of 30 percent on chocolates and chocolate products and 20 percent on most variants of watches that come in from Switzerland. I must say here that somehow that duty levels were a little higher than this.
The agreement with EFTA – which comprises Iceland, Liechtenstein, Norway, and Switzerland – will come into force after the ratification process is completed by all the parties involved.
None of these countries are members of the EuropeanUnion.
In return, India has received an investment commitment of $100 billion in the next 15 years.
India will then start reducing basic customs duties on chocolates and on wrist as well as pocket watches originating from Switzerland and it will be brought down to zero in equal instalments over a seven-year period, Reuters reported.
Yes, so don’t rush to your watch or chocolate store yet.
Total trade between India and the four EFTA nations stood at $18.66 billion in 2022-23, with the largest share belonging to Switzerland, followed by Norway.
India's key exports to EFTA countries include organic and inorganic chemicals, drugs and pharmaceuticals, gems and jewellery. Major imports from these states are gold, pharmaceuticals, watches, and ships and boats.
Commerce and Industry Minister Piyush Goyal described the signing as a "watershed moment", as it is India's first modern trade pact with a bloc having developed countries.
It’s Official, No Special Deal For Tesla as Core Report Argued
In November last year, India’s trade and industry minister Piyush Goyal visited the manufacturing facility of Tesla in Fremont, California.
That, atop an earlier meeting between Elon Musk and Prime Minister N Modi in June last year added further fuel to the speculation that Tesla was rushing to set up a manufacturing plant in India, including for a low cost electric car costing around Rs 20 lakh. Yes its not exactly low cost but if you read the news reports it would have you believe that you would be driving around in a locally made Tesla in months.
It then emerged that Tesla wanted to export to India first and then manufacture. And wanted concessions on the current completely built units (CBUs) customs duty level ranging from 60 per cent to 100 percent, depending on engine size and cost, insurance and freight (CIF) value less or above USD 40,000.
The Core Report has pointed out repeatedly that Tesla is being wooed aggressively by several countries to set up manufacturing, including of very late Thailand and a decision to manufacture here would not be that simple.
Moreover, Tesla itself has been going slow since last year even as its core market for EVs, the US, is slowing.
And then, as we asked repeatedly, why should India make an exception for Tesla imports when no other car makers including foreign ones who have slogged it out in India for decades were not getting it ?
So now the minister has said India will not tailor its policies to suit US EV maker Tesla, and its laws and tariff rules will be formulated to attract all-electric vehicle manufacturers.
Tesla has been seeking an initial tariff concession that would allow it to offset 70 per cent customs duty for cars priced less than USD 40,000, and 100 per cent for cars of higher value.
Mr Goel said the Government was in dialogue with potential investors from across the world from Europe, from the United States, from the Far East, from Japan, from Korea," he said.
"Government does not tailor policy for any one individual company or its interests. Everybody's free to make their demands. But that does not mean that the government will necessarily take a decision (based on) what you demand," he said.
So it does appear to me, if I was reading between the lines, that Tesla has already cooled off coming to India for now.
Tesla is a great car but there are sufficient and pretty good international and increasingly domestic options available i feel and you can see them on roads already. That of course is a different subject for later.
Bangalore Fights Water Crisis
Bangalore, which reeled under floods in September 2022 and November 2023, last year, is now facing an acute water shortage which is hitting homes and businesses alike, affecting production at garment factories and hitting restaurants, among others.
Some 14 million people live in Bangalore and the city, like most others in India, is bursting at its seams.
A senior employee at Dell told Reuters that his team was skipping meetings to chase water tankers who in turn have hiked their prices. Microsoft was using tap aerators to control water flow and recycling water in washrooms in at least one office while other companies were also embarking on similar water conservation efforts.
Elsewhere, cities like Mumbai also are gearing to impose water cuts due to depleting water stocks, presently at the lowest in 3 years.
There is a supply and demand problem as we will delve into shortly and very little has been done to address the problem of water scarcity on the demand side.
I reached out to MRIDULA RAMESH, award-winning author of the critically acclaimed The Climate Solution and Watershed, and the founder of Sundaram Climate Institute, which focuses on waste and water solutions.
The Madurai based Ramesh who worked with McKinsey in Silicon Valley before returning to India is also an active cleantech angel investor and is an executive director of Sundaram Textiles.
I began by asking her why the situation was spiralling out of control in the manner that it was in Bangalore and what were the lessons to learn and responses to frame?
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It's Not Just AI Chips That Are Booming
SInce we have been talking mostly about booming AI chips and Nvidia, perhaps it would be noteworthy that people are going equally mad over potato chips as well.
Pringles owners Kellanova, earlier known as Kellogs, has said it can’t keep up with Pringles demand from hungry snackers across the globe, reports Bloomberg.
Pringles is available in India and has brands like fusion chutney and desi tadka.
Kellanova’s CEO Steve Cahillane said last week in Chicago that they were selling every can of Pringles we can make, adding they were opening new factories in Asia and Mexico even as we speak.
Kellanova needs the fried potato crisps to gain market share after it spun off its North American cereal business last year in an effort to focus on categories such as snacking and frozen foods.
Kellanova also has a noodles business in Nigeria that generates nearly $1 billion in sales.
