A Formal Trade Deal with US is at Least 6 Weeks Away
The stock markets are edgy once again because the fine print of the India-US trade deal is not out
On Episode 792 of The Core Report, financial journalist Govindraj Ethiraj talks to Vaibhav Porwal, Co-founder at Dezerv as well as Dr Nipun Sharma, CEO at TeamLease Degree Apprenticeship.
SHOW NOTES
(00:00) Stories of the Day
(01:15) A formal trade deal with the US is at least 6 weeks away
(04:37) What could drive markets in the next few months?
(14:41) Middle east tensions are driving oil prices again
(15:57) How women apprentices are increasingly entering the workforce
(26:00) Why do some restaurants last a 100 years and others don’t?
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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 feedback@thecore.in.
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Good morning, it's Friday, the 6th of February, and this is Govindraj Ethiraj broadcasting and streaming weekdays, usually from Mumbai, India's financial capital, but in transit right now.
And that brings us to the top stories and themes as we go into the weekend…
A formal trade deal with the United States is at least six weeks away.
What could drive markets in the next few months?
Middle East tensions are driving oil prices again.
How women apprentices are increasingly entering the workforce.
And why do some restaurants last a hundred years and others don't?
Edgy Markets
The stock markets are edgy once again because the fine print of the India-US trade deal is not out, and it is clear it will take longer as was expected and predicted by trade experts like Ajay Srivastava of the Global Trade Research Initiative who we spoke to yesterday. On Thursday, India's trade minister, Piyush Goel, said India and the US expect to sign a formal trade deal in March, after which India will lower tariffs on US goods. The two countries will issue a joint statement within four to five days, after which Washington will cut duties on Indian exports to the US from 50% to 18%.
India in turn will buy about $500 billion worth of US goods over the next five years, including about 70 to $80 billion of Boeing aircraft, according to Goel, reported by Reuters. So for exporters or importers, the uncertainty will clearly continue a little longer. Remember, President Donald Trump had announced a deal with Vietnam in early July 2025, but the agreement was only signed in October end 2025.
Back home, the trade minister said India will increase purchases of energy, aircraft, and chips from the United States, and he said orders placed or ready to be placed for aircraft along with engines and other parts would be worth about $100 billion. Last month, Air India said it had nearly 200 aircraft on order with US planemaker Boeing, while another airliner, CASA, said it had orders for 226 Boeing 737 MAX jets. Elsewhere, Reuters also reported that India's Reliance Industries has bought 2 million barrels of Venezuelan oil, according to trade sources being quoted on Thursday.
Now, that relevant part is the fact that this is the first purchase by Reliance from Venezuela in nearly a year. A US military operation last month captured the country's president, Nicolas Maduro, and spirited him off to New York for trial on drug trafficking charges, after which the US struck a supply agreement for oil with interim president, Del C. Rodriguez. To return to the markets, and noting that nervousness, equity markets and indices, the Sensex and Nifty were down after the three-day rally.
The Sensex closed 504 points down at 83,314, and like we said, it snapped the three-day winning streak where it had gained about 3,096 points. The Nifty 50 was down 133 points to 25,579. In the broader market, the BSE mid-cap 150 was down 0.5, and the small cap 250 was down about 1%.
On Wall Street, investor jitters about tech stocks, we spent some time on that yesterday, are persisting according to a Wall Street Journal report. Stock futures were lower on Thursday with Nasdaq 100 contracts falling about 1%, and the broader Nasdaq composite is coming off its worst two-day pullback since last April's tariff turmoil, according to the Wall Street Journal. Alphabet stock was down, and its parent company reported robust earnings late Wednesday, but said that AI-linked investments could push capital spending up to $185 billion this year.
Bitcoin is now past the $70,000 level on Thursday in the downward direction. As a slide showed no signs of stopping, it fell about 3.8% to about 69,858. And the important part here is that this is its weakest level since November 24th, when US President Donald Trump won the US elections, having signalled his intention to support crypto on the campaign trail.
So clearly, the markets have been on a bit of an unpredictable ride in the last few days, though you could argue much longer. So I reached out to Vaibhav Porwal, co-founder of wealth management firm Deserve, and I began by asking him how he was seeing the markets in recent months and days, and his outlook as a manager and stock picker.
INTERVIEW TRANSCRIPT
Vaibhav Porwal: It's not just last week or last one month, the buildup has been happening for last 18 to 19 months. So September 24 is when markets hit all-time high. And thereafter, there has been a bit of a struggle in the market.
It was largely driven by all three engines of the economy. First, we saw substantial slowdown in private consumption, which was driven by monetary tightening, which was triggered by RBI increasing rates and taking liquidity out of the system. Plus, some crackdown on personal loans also, which created substantial amount of impact on private consumption.
Government capex had also slowed down in the backdrop of 2024 election, and it continued till December 24. Thereafter, government picked up the pace, but still, there was some degree of slowdown there. And third, on the trade front, we've been struggling since November of 24 for obvious reasons.
So it's been building up. While government has done its bit over last 15 to 18 months to resolve all the domestic issues. So we had big announcement on tax cuts.
So direct tax relief was big, almost 1 lakh crores of incremental money in the hands of the consumers. RBI got its act together, or RBI also joined the bandwagon by reducing interest rates plus doing a lot of open market operations to infuse liquidity and reducing CRR also. So all of that added a lot of liquidity.
And as a result of that, we are finally seeing substantial uptick in the credit growth. Credit growth is back to 12-13% kind of numbers. Now, the third missing piece was global trade situation.
India was desperately looking to close the deal with US, but in the meantime, they've done a remarkable job by signing up deals with all the other major trade partners also. So we have UK, which is ticked. We have UAE, which is ticked, Australia and Eurozone.
So almost 70% of the world's GDP is getting covered through this. So really, really commendable job has happened over last 18-19 months. Now, the big issue for the market has been elevated valuations in September of 2024.
So after 16-18 months of time correction, we are finally at a stage where valuations have become reasonable and market is beginning to look very exciting again. In this backdrop, the budget came and everyone was expecting some fireworks from budget, but thankfully, government didn't give in to the temptation of doing anything extraordinary. They maintained balance, they ensured that fiscal discipline remains.
In this current global backdrop, it's important that our domestic balance sheets are healthy to avoid any kind of undue volatility. So everything has come together and we are very confident that markets will start its upward journey now. Now, the only difference would be the winners of the current run will be very different compared to the winners of the last run.
So that is something that we are very confident about. Last bull market, if I can say, between 2021-24 was largely CapEx, defence and PSU driven. This time it will be more consumer discretionary driven is what our sense is.
Govindraj Ethiraj: Yeah, when you say the bull run will be different or different basket of stocks could do better, you're saying that these are stocks which did not do well earlier in that period, if I'm thinking the large consumer product companies, or is it a newer set?
Vaibhav Porwal: No, large consumer discretionary plays, whether through the consumer discretionary stocks or proxies like NBFCs and banks. All these should start doing well. We are seeing good uptake and credit offtake, so which is supportive.
Plus, imagine the amount of liquidity which consumers have in hand. You have income tax relief, you have GST relief, plus next year you will have 8 pay commission implementation also. All of these put together, we are talking about 4 to 5 lakh crores of incremental liquidity in the hands of consumers.
Plus, combine that with supportive interest rate environment where you can borrow money at much lower rates. Housing loan rates have come down to 775. So all of these factors are much more favourable for private consumption.
And since they have not seen any up move over the last 4-5 years, or the up move has been significantly lower compared to other parts of the market, some catch up rally is overdue.
Govindraj Ethiraj: Right, and you said valuations were not good. We have seen 16-18 months of time correction, valuations are looking better. So can you put a number to that or illustrations?
Vaibhav Porwal: See, I am always careful in using averages because averages can mislead you. But when I look at the distribution, I am seeing almost 40-50% companies in BSE 750 are trading below their historical average valuation. I am not looking at numbers at an index level as an aggregate because we don't invest necessarily in index.
We invest in mutual funds who in turn invest in these select opportunities. So when I look at basket of the securities in which we are invested, we are trading at 24 times 1 year forward March 27 and 21 times March 28. So which I think is reasonable in the context of cost of capital that we have currently.
Plus the growth potential of the economy.
Govindraj Ethiraj: If I were to come back, you said about 5 lakh crores of additional liquidity in hands of consumers. So that liquidity I am assuming is already being spent or is being absorbed into the system. But the valuations are really what have to catch up, isn't it?
Vaibhav Porwal: No, liquidity got consumed in the system also and in the industry also, spending also. If you look at festival season sales, numbers were very good. Auto sales numbers were very good.
Liquidity is there in the market also.
Govindraj Ethiraj: Let's say 5 lakh crores is in the hands of consumers.
Vaibhav Porwal: 2 lakhs have already come. GST plus income tax.
Govindraj Ethiraj: So that money has come and that should lead to, let's say, higher sales for auto companies, soap companies and so on. Both durable, non-durable, discretionary, non-discretionary. That we can see particularly in the case of cars.
Now my question is the stock prices haven't yet kept pace with that. I mean, if anything, they're going in the other direction. So your argument is that the fundamentals are much stronger today and the valuations have to now catch up.
Absolutely.
Vaibhav Porwal: Even if valuations don't catch up, earning growth will be substantially higher to give you reasonable returns in the market. So let's say valuations remain where they are. Earning growth is 12-15%.
Then you will make 12-15% returns purely on account of earnings growth.
Govindraj Ethiraj: Got it. And how are you seeing the overall market now in terms of flows, both domestic and foreign portfolio? And the fact that, you know, if we look at MSCI India, we have obviously underperformed almost every market now in the consideration set.
So what can change that? Because we are also to some extent or large extent dependent on how we stack up against other markets, not just within.
Vaibhav Porwal: So India's premium compared to other emerging markets has come back down to historical averages. We always traded at a premium for good reasons. So Indian markets are much more diversified.
They offer much more variety of stock investing. They have far greater liquidity when you compare with, let's say, a country like South Korea, which is nothing but three companies you can invest in. Oh, three companies.
So you can invest in Samsung and Taiwan is nothing but TSMC, right? India gives you diversified exposure. The reason from which FIs have been selling out of India is partially because of AI trade, which is playing out globally.
And second, because emerging market funds have not delivered returns over the last eight to 10 years compared to developed markets funds. So some withdrawal was happening on account of that. Now, obviously, given that AI trade is looking much more vulnerable compared to a couple of years ago, everyone is looking back at emerging market markets or markets where AI bubble threat is not there.
So India should start receiving some benefits of that. Even if the selling abates, it's good enough for us. Yesterday's numbers were 5000 crores of FI purchase after a period of time.
So hopefully we are seeing some early signs of reversal.
Govindraj Ethiraj: Right. So as you look at sectors, so you said consumer discretionary. So that's one bucket.
Is there any other bucket that interests you? And within consumer discretionary, I mean, are you able to go one or two layers deeper?
Vaibhav Porwal: So banking and financials, we are extremely comfortable both in terms of valuations plus earning growth. We are very comfortable with construction related sectors. So cement in particular looks very attractive to us.
But we have to be mindful that geopolitics is still turbulent. And in that environment, we need to have some allocation to precious metals also. So we continue to believe that outside of equity, you need to have allocation to harder sets like precious metals and REITs and INVITs.
So these are good proxy assets against any global risk.
Govindraj Ethiraj: And you've not had any change of mind because of what we've seen in the last few days in gold and silver. I know things are picking up again, but we saw a fall of the like we've not seen maybe for, I don't know how many decades.
Vaibhav Porwal: Honestly, we didn't invest in gold or silver for this kind of gain. So we are happy that we are still sitting on a reasonable amount of gain. We had completely moved out of silver because speculative interest in silver as a commodity had gone up multifold.
And in that environment, it's difficult to predict the direction of price movement. So we were zero on silver. Gold we continue to hold and we continue to.
It's a strategic allocation in the portfolio. If currency debasement plays out faster than what everyone else is expecting, then that will give you some buffer against portfolio volatility. Right.
Last question. Is there any theme for 2026 that you had started out with? Domestic consumption is what we are looking at.
We are really excited about domestic consumption making a comeback. We are under pressure on IT because we think margin pressure will definitely be there.
Govindraj Ethiraj: Right. Vaibhav, thank you so much for joining me.
Vaibhav Porwal: Absolute pleasure. And thanks Govind.
Middle Eastern Oil
The Middle Eastern events there are once again actively influencing oil prices right now.
They fell more than 1% on Thursday, but held close to multi-month highs after the US and Iran agreed to hold talks in Oman on Friday, says a Reuters report, which also added that Brent crude futures were down to $68.70 on Thursday morning. Elsewhere, discounts on Russian oil exports to China have widened to new records this week as sellers cut prices. Price cuts for China came after the trade agreement or deal between India and the United States, which includes, of course, halting oil purchases from Russia, but further details are not at this point available.
Reuters says a halt by India would make China the only major client for cheap Russian oil, and the world's second biggest oil exporter is already struggling with falling demand from India because of those sanctions, and as we mentioned earlier, Reliance has already switched. It had stopped buying Russian oil and has now switched to Venezuelan oil. JP Morgan analysts, however, say in their base case that India will still import about 17 to 20% of its total crude imports from Russia after the deal.
Women In Apprenticeships
Women's participation in apprenticeships has risen nearly 58% from 21, 22 to 23, 24. The number is 124,000 to about 197,000 as structured apprenticeship programmes are emerging as a key driver of inclusive economic empowerment in India, according to a new report titled Her Path, Her Power, which highlights how apprenticeships are enabling women to enter and sustain careers across sectors like information technology, banking, financial services, healthcare, retail, and manufacturing.
Now, this report has been developed by degree apprenticeship provider Timley's Degree Apprenticeship, along with GAN Global and the India Employer Forum. The report also says 38% of companies still have no women apprentices, and only 34 to 37% of graduating women are considered industry employable. I reached out to Dr. Nipun Sharma, CEO of TeamLease Degree Apprenticeship, and I began by asking him to explain first the types of apprenticeships in India and how they worked before asking him to go over the report.
INTERVIEW TRANSCRIPT
Dr. Nipun Sharma: So first of all, we had Apprentices Act 1961, which mandates every Indian company with more than 30 employees to at least have two and a half percent of their workforce as apprentices. However, you know, this is something which was not widely known both in the industry as well as with the youth and therefore the traction was slow. However, we see that in the recent last five years, there has been a lot of focus from the government and the scheme, which is National Apprenticeship Promotion Scheme or basically undergrads wherein the apprentice gets a direct benefit transfer of rupees 1500 per month.
Then there is a second scheme, National Apprenticeship Training Scheme called NATS wherein the apprentice gets a direct benefit transfer of 4,500 rupees per month for one year, this is essentially for diploma and graduate holders. And the third scheme was brought in by, which is named as Prime Minister's Internship Scheme, PMIS. And here this was focused only on the top 500 companies of the country.
But this is one scheme, which has seen the least amount of traction. In fact, in the last year's budget, there was a provision of 10,800 crores, but hardly about 550 crores would get utilised in this year. And therefore this scheme has not taken off in a meaningful manner.
Got it. Tell us about the study and why you did this. So Govind, if you see, you know, women constitute 48% of India's population, but amazing thing is that they only contribute to 18% of India's formal GDP.
So it is not only a big social issue, it's a big economic issue for the country. As per IMF estimates, you know, if we close this gender gap between male workforce participation rate and female workforce participation rate, our GDP can grow up by 27%. So that is a phenomenal opportunity, which is there in the country.
The second thing context is that education is not leading to employment. So we see that, you know, female enrolment, gross enrolment ratios are going up. In fact, even in higher education now, 42% of the STEM enrolments are from women.
But once they complete their education, they are not getting meaningful career pathways. And as I said, that the female workforce participation rate is only 41.7%. That means 60% of the working age women are not finding employment. And therefore this study wanted to understand that, you know, how this can be really implemented and how it can be a win-win for the women, for the industry and for the...
Govindraj Ethiraj: So when you said 41% labour participation by women, is that for a certain category of industry or education?
Dr. Nipun Sharma: No, it is for all women or females in the working age population, starting from 15 plus.
Govindraj Ethiraj: Okay. So that seems to have gone up because the number that I remember last was much lower.
Dr. Nipun Sharma: Yeah. So absolutely it is going up. In fact, as I was saying that apprenticeship is a gateway for entering into the workforce.
So five years back, only 7 to 8% of the total apprentices were females. Now it has gone up to 20%. So in the last three years, the growth rate has been 58%.
So while this looks very encouraging, but if you see in the overall apprentices ecosystem, the female ratio is only 20%, 80% is still male. And the study found out that still awareness is quite low. You know, the studies found out that 38% of the organisations, which are companies, which we surveyed, they had zero female apprentices.
So they were not even aware that women apprentices can be such a force multiplier. In fact, some of the companies that started with compliance by mandatorily having 2.5% of their workforce as apprentices, they took on some women apprentices and they were surprised to find that the females take less leaves, you know, less absenteeism, more sincerity, more productivity, less IR issues, less attrition, and often, you know, once the females are there on the shop floor or on the office floor, overall the culture also improves quite a bit. So we have started seeing companies now increasing their intake.
And very interestingly, Govind, some of the companies have found out and some sectors have found out that women are naturally suited to do some jobs better. For example, we are seeing that the biggest growth in exports in our countries are smartphones and in smartphone SMT, you will find women far outnumbering their male counterparts. So something which started as a compliance requirement, companies have found some great advantages of having women as part of their apprentices.
Govindraj Ethiraj: And how does the apprentice scheme or the programme work for any normal person who is looking for an apprenticeship? Where does that person find it? How does it flow?
Dr. Nipun Sharma: Yeah. So Govind, you know, we have our demographic dividend, our average age is 28 and a half years. And on the other hand, the country faces a talent gap of 1.5 to 2 million skilled talent workforce. So clearly, you know, people who are being churned out by the education system are not employable. So only 54% of the graduates are employable. So in apprentices scheme, what the government has rolled out, any person who's passed out from school, you know, whether it is a class 5, minimum age 14, but generally class 10 pass out, class 12 pass out, diploma, ITI, and even graduates, if they are freshers, can become an apprentice wherein they get a stipend from the employer.
They get a direct benefit transfer from the government of India. In case they are under NAPS scheme, they get 1500 rupees per month direct from the government. In case they are under NAPS scheme, they get 4500 rupees per month.
And while they do on the job training with the employer, they can also do education. So the government has allowed education as well. So in 3 to 12 months, she can get a certificate.
In 2 years, she can get a diploma. And in 3 years, she can get a degree while working on the job. So this is something which is allowed by the government.
And for the employer, the advantage is that at the end of the apprenticeship period, they can decide to retain whichever apprentice they find has fit the bill and they're under no obligation to absorb them in their workforce. So typically 40% of the apprentices get absorbed by the same company, but the balance 58% find employment in the same sector. So 98% people are able to find a formal employment because they have industrial element skills and they are young and they can be skilled as an entry-level talent supply chain.
Govindraj Ethiraj: And is there any skew happening because of industry? I mean, you mentioned smartphones because that's where a huge amount of investment has come in, mostly Tamil Nadu, Karnataka, and so on.
Dr. Nipun Sharma: So what we are seeing is that healthcare has become the number one sector where now there are more women than men in apprentices. Another sector where we are seeing is IT industry, where again, women are really, really seeing a good growth in apprenticeships and entry-level jobs. And then some of the new sunrise industries like batteries, EVs, EMS, where women are getting a very strong growth rate.
Also, we see cities where the ecosystem is getting together. So the report says that more than half of the women, their number one issue is safety and transportation. So in a city like Hyderabad, where safety is sorted to a great extent, where there's a good public transport and enabling industries, now women constitute 42% of the apprentices.
And one more big announcement, we had also taken up with the government. In this union budget, government has come up with a path-breaking scheme wherein they intend to have one girls hostel in every district of the country. So a lot of parents who were hesitant to send their daughters for entry-level jobs will now have working women hostel where their daughter or sister or female family member can stay and their safety is kind of assured.
Govindraj Ethiraj: Right. Last question, Nipun. So what you're seeing today, I mean, the shifts in numbers, is it pull factor, push factor or both?
And if a company were to be listening to this, what could they be doing to enrol?
Dr. Nipun Sharma: Right. First of all, it is, you know, push can only work to a certain extent. I think it is all pull based.
So what companies are realising that, as I said earlier, that, you know, women are very sincere, you know, they pick up skills fast, their attritions are low or productivity is higher, less higher issues, so they can enrol. You know, depending on the job role for blue collar roles, they can hire somebody who's passed out of class 10th or 12th. And for white collar roles, they can look at, you know, somebody who's passed out of college.
And, you know, the government also allows now that once you the apprentice on board, they can also do distance learning while doing their apprenticeship. So at the end of three years, they can also get a degree. Whereas their counterpart who's gone through a normal education system would only have a degree here.
They would have got a stipend from the company, a DBT from the government. They would have picked up industry relevant skills, and there are 98% chances that they will get absorbed in the same sector as soon as they complete their apprenticeship. So it's a win-win for you, for the industry and for academia, who's also looking at outcomes, you know, so that the students who are passing out can get meaningful employment.
Govindraj Ethiraj: All right, Nipun, thank you so much for joining me.
Dr. Nipun Sharma: Most welcome. Thank you very much.
Old Restaurants
There are several restaurants in India that are over 100 years old. Britannia & Company and Leopold Cafe in South Mumbai are two examples that I'm intimately familiar with.
There are other examples in Delhi, Kolkata, Pune, and Guwahati amongst even others. But what makes some restaurants last and others not? Many of these, for example, the ones in India have never branched out quite literally, sticking to the same location for a century, as we can see with sometimes minimal changes in their menus and even their style of engaging with customers. The Washington Post recently did a report on what makes restaurants last at a time when people tend to focus on the fashionable, the future, and the here and now.
There are lessons to be gleaned from what's come before, though. The longer you can look back, Winston Churchill is believed to have said, the farther you can look forward. The Washington Post says in its profile of six restaurants, which it says that while as different as the six restaurants are, and despite their hardships, they share common threads, including mostly steady stewardship, singular hospitality, and cooking that's true to the mission.
More than just places to eat, they are living institutions shaped by generations of care and continuity. Their legacy is found in recipes passed down and stories retold long after the table is cleared. As the principal of one longtime establishment told the Washington Post, summing up all the subjects' sentiments, we're not just running a restaurant, we're carrying a torch.
So a thought for you, does tradition matter to you in restaurants and why do you feel restaurants, for that matter, organisations, last so long? Can we take away some lessons from these restaurants, whether in Mumbai or Washington, for us and about the very people that frequent them?
