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By:

C.S. Krishnamurthy

21 June 2025 at 7:45:51 pm

Strong India, Cautious Investor

The Indian economy appears stronger than the nervousness visible in the stock market might suggest. Corporate earnings are improving, domestic demand remains reasonably resilient and several sectors are reporting healthy growth. Yet investors are facing an unusual mix of risks: crude oil is moving towards $100 a barrel, global bond yields are rising, foreign investors have turned sellers again and parts of the Indian market remain expensive. That leads to a simple investment message: India's...

Strong India, Cautious Investor

The Indian economy appears stronger than the nervousness visible in the stock market might suggest. Corporate earnings are improving, domestic demand remains reasonably resilient and several sectors are reporting healthy growth. Yet investors are facing an unusual mix of risks: crude oil is moving towards $100 a barrel, global bond yields are rising, foreign investors have turned sellers again and parts of the Indian market remain expensive. That leads to a simple investment message: India's growth story remains intact, but investors should not mistake a strong economy for a risk-free stock market. The latest corporate results offer considerable comfort. The economic momentum built over the past few quarters has not been derailed by geopolitical tensions. The margin pressure feared across several industries has also been less severe than expected. More importantly, earnings growth has been reasonably broad based. Large, mid and small companies have all shown healthy growth. If oil-related businesses, which are somewhat different in their earnings pattern, are excluded, the gap between the three market segments is not particularly wide. Financial services have been among the strongest performers, with banks, NBFCs and capital-market businesses reporting good growth. Capital goods, metals, telecom and power have also done well. For investors, this is significant. A stock market supported by genuine improvement in corporate profits has a much stronger foundation than one driven merely by enthusiasm. Domestic Risk The monsoon, however, remains an important domestic risk. Rainfall has been below normal so far, although the impact on the rural economy has not yet been alarming. Tractor and two-wheeler sales remain reasonably strong, suggesting that parts of rural India continue to spend. At the same time, increased demand under the rural employment guarantee programme suggests that weaker rainfall may be affecting poorer rural households more severely. Food inflation adds another complication. Higher food prices may improve the income of farmers who sell their produce, but they also increase the expenses of families who buy food. Therefore, higher food inflation cannot automatically be interpreted as stronger rural purchasing power. India is nevertheless better prepared than it once was. A healthy IPO market is a positive development. It allows companies to raise capital and gives investors fresh opportunities. But there is a point at which too much supply begins competing for the same pool of money. The current market provides a striking example. The much-awaited IPO of the National Stock Exchange is reportedly being considered at a size of around Rs. 24,000 to Rs. 25,000 crore, down from earlier expectations of Rs. 30,000 crore but a very large issue nonetheless. The message is not that investors should avoid IPOs. It is that an exciting new issue should not automatically be preferred over an established company merely because the new issue is attracting headlines. The bigger uncertainties are global. Brent crude has moved close to $100 a barrel as tensions in the Middle East have intensified. For India, which imports most of its energy requirements, expensive crude can mean higher inflation, a wider trade deficit and pressure on economic growth. US bond yields are another concern. Higher yields make dollar investments more attractive and can reduce the appetite for emerging markets such as India. This does not necessarily mean that global investors have abandoned India. It shows how quickly investment decisions can change when oil prices, interest rates and currencies move. Domestic investors, particularly mutual fund investors, therefore have an important role in providing stability. Their regular investments can partly offset foreign selling, although domestic flows cannot make the market immune to global shocks. Faster Growth The enthusiasm for small and mid-cap stocks is understandable. Many of these companies offer faster growth and have rewarded investors handsomely. But if investors pay too much for expected growth, even a good company's share price can disappoint. Large-cap companies, after a period of relative underperformance, may offer more comfortable valuations and greater stability. The right mix will depend on an investor’s financial goals, investment horizon and ability to withstand market fluctuations. India’s economic story remains encouraging. Corporate earnings are healthy, domestic demand has resilience and the economy has become better equipped to absorb individual shocks. But the stock market is not the economy. For the common investor, therefore, the most useful question today may not be, “What should I buy?” It may be, “Is my portfolio balanced enough to withstand what I cannot predict?” (The writer is a retired banker and author. He can be reached at krs1957@hotmail.com. Views personal.)

US Vice President JD Vance, his family arrive in Delhi

PTI
Apr 21, 2025
2 min read


NEW DELHI: US Vice President J D Vance arrived here on Monday on a four-day visit to India against the backdrop of ongoing negotiations for a bilateral trade agreement between the two strategic partners to address a variety of issues, including tariff and market access.


Vance is accompanied by his Indian-origin wife Usha Chilukuri and their three children Ewan, Vivek, Mirabel and a delegation of senior US government officials.


The US Vice President and the Second Lady were received at the Palam air base by Union Minister Ashwini Vaishnaw.


The American leader was also accorded a ceremonial welcome on his arrival.

In the evening, Prime Minister Narendra Modi will host a dinner for the Vances after holding wide-ranging talks with the US Vice President.


External Affairs Minister S Jaishankar, NSA Ajit Doval, Foreign Secretary Vikram Misri and Indian ambassador to US Vinay Mohan Kwatra are expected to be part of the Indian team to be led by PM Modi at the talks.


The focus of the meeting is likely to be on early finalisation of the proposed bilateral trade pact as well as ways to boost overall trajectory of ties between the two countries.


Besides Delhi, Vance and his family will travel to Jaipur and Agra.

Vance's first visit to India comes weeks after US President Donald Trump imposed and then paused a sweeping tariff regime against around 60 countries, including India.


New Delhi and Washington are now holding negotiations to seal a bilateral trade agreement that is expected to address a variety of issues, including tariff and market access.


Vance and his family are scheduled to leave for Jaipur on Monday night.

In Delhi, the US Vice President and his family are staying at the ITC Maurya Sheraton hotel.


On April 22, the Vances will visit a number of historical sites in Jaipur, including the Amer Fort, also known as Amber Fort. The fort is a UNESCO world heritage site.


In the afternoon, the US Vice President is scheduled to address a gathering at the Rajasthan International Centre in Jaipur.


Vance is expected to delved into broader aspects of India-US relations under the Donald Trump administration during his speech that is expected to be attended by diplomats, foreign policy experts, Indian government officials and academia.


The US Vice President and his family will travel to Agra on the morning of April 23, people familiar with the matter said.


In Agra, they will visit the Taj Mahal and Shilpgram which is an open air emporium showcasing various Indian artefacts, they said.


After concluding their visit to Agra, the Vances will return to Jaipur on the second half of April 23.


The US Vice President and his family will depart for the US from Jaipur on April 24, according to the people cited above.

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