Markets Slip Down In Anticipation Of Fed Moves | Why Are India’s Exports Slipping? | The Core Report

On Episode 391 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Srivastava, founder of the Global Trade Research Initiative.

SHOW NOTES
• (00:00) The Take
• (04:12) Markets slip down in anticipation of Fed moves
• (05:10) India overtakes China on key MSCI Index
• (08:20) Why are India’s exports slipping?
• (17:49) Should you rent or buy?

The Take:

In a bull market, anything goes, including branding a stock category with the prime minister’s name, as CLSA did before the elections. While the index initially performed well, Bloomberg reports it has only gained 2% in the prime minister’s first 100 days of his new term, compared to consumer and software stocks rallying 20% and 34%. CLSA may have missed broader market trends, and domestic and foreign funds are now reducing exposure to capital goods and other sectors. Stock markets are unpredictable, and the current wave may be different from the last. Perhaps CLSA will come up with a new term soon.

Markets Slip n Slide:

The markets slipped again, awaiting cues from the Federal Reserve on interest rates. Rapid changes are more concerning than gradual fluctuations. The BSE Sensex and NSE Nifty50 hit record highs before falling back. The BSE Sensex fell 131 points to 82,948.23, and the NSE Nifty ended at 25,377.55, down 41 points.

India Overtakes China:

India has overtaken China in a key MSCI equities index. India’s weight in the MSCI index is now 2.35%, slightly higher than China’s 2.24%. India’s nominal GDP growth is in the low teens, three times China’s rate. This divergence in earnings growth could lead to more inflows into Indian markets, which are among the best-performing globally this year.

More Rice Curbs To Go:

The government may ease restrictions on non-basmati rice exports as inventories rise. Recent moves include raising import duties on edible oils and allowing exports for certain agricultural products. Last week, the government removed the floor price for basmati rice exports.

China Steel Falls:

China’s steel production fell by over 10% year-on-year in August due to low prices and demand, marking the weakest August since 2017. Production volumes for the first eight months were 3.3% lower, signaling a decline after more than two decades of growth.

Why Are Exports Falling?

India’s merchandise exports contracted 9.3% in August, driven by a 37.5% drop in petroleum exports due to the Red Sea crisis affecting shipping routes. Imports rose 3.3%, leading to a trade deficit of $29.65 billion, a 10-month high. Gold imports surged due to reduced import duties. Non-petroleum exports remained relatively stable. Ajay Srivastava, Founder of the Global Trade Research Initiative, explains that excluding petroleum, exports were down only half a percent. He suggests the crisis may impact other high-volume, low-value sectors like textiles and leather.

Should You Rent Vs Buy?

Rental values in key markets of top cities have risen up to 72% over the last three years, outpacing capital value growth. Bangalore, Pune, Kolkata, and Chennai saw higher rental growth compared to capital values, while NCR, MMR, and Hyderabad experienced the opposite. Deciding whether to rent or buy depends on multiple factors, including long-term location and financial stability, making this a complex debate.

Stay tuned as host Govindraj Ethiraj delves into the latest market movements, India’s export challenges, and the ongoing rent vs. buy debate. Don’t miss insights from Ajay Srivastava on trade trends and the factors shaping India’s economy. Subscribe for more in-depth discussions and stay ahead of the curve with The Core Report!

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