FIIs Buy $4.8 Billion In 12 Sessions As Markets Rise
Global investors see India as a safe haven, sufficient to discount the concerns over an escalation and conflict between India and Pakistan on the border
On Episode 573 of The Core Report, financial journalist Govindraj Ethiraj talks to C S Vigneshwar, President at FADA as well as Gulam Zia, Senior Executive Director - Research, Advisory, Infrastructure, and Valuation, Executive Director at Knight Frank.
SHOW NOTES
(00:00) Stories of the Day
(01:00) FIIs buy $4.8 billion in 12 sessions as markets rise
(04:44) Oil prices fall as OPEC supply overhang sets in. Rupee gains
(08:15) CNG car sales overtake diesel for the first time, hybrid is bigger than electric
(15:09) India’s real estate sales trends are now diverging after moving in sync for some years
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].
—
Good morning, it's Tuesday, the 6th of May, and this is Govindraj Ethiraj at Headquartered and Broadcasting, as well as streaming from Mumbai, India's financial capital, presently boasting some excellent air quality at an AQI of 50.
Our top stories and themes,
Foreign Institutional Investors buy close to $5 billion in 12 sessions as the markets stay strong.
Oil prices fall as OPEC supply overhang sets in, the rupee gains.
CNG car sales overtake diesel for the first time, hybrid is bigger than electric.
And India's real estate sales trends are now diverging across cities after moving in sync for some years.
FII Flows Are Strong
It's an interesting triangle. Global investors see India as a safe haven, sufficient to discount the concerns over an escalation and conflict between India and Pakistan on the border. Indian investors take comfort in India's economic stability, including lower interest rates and low inflation.
And of course, the fact that we are not as badly hit in the event of a tariff war. And of course, the prospect of a favourable trade deal. The big push is oil, whose prices are falling once again and help keep inflation low, manage India's import bill and keep reserves in good shape.
So even if several other factors could be going against Indian markets at a point of time, low oil prices could be one of the major offsets or counters. And then there are the US markets, which continue to look as unpredictable as before. And not surprisingly, foreign investors are buying steadily into India.
Foreign investors bought shares worth close to $4.8 billion or just under $5 billion in the last 12 sessions, the longest streak in two years, according to Reuters, which added that the benchmarks, that's the Sensex and Nifty, also logged their longest weekly winning streak so far in 2025. That's last week. On Monday, the indices were up on the back of that foreign buying we spoke of, as well as renewed hopes of a trade deal with the United States.
And the Sensex closed up 295 points at 80,797, while the Nifty 50 was up 114 points at 24,461. Stocks of the Adani Group were up on Monday after Bloomberg reported that group officials were meeting Trump's administrative team to close a US bribery case against them. The broader indices did better with the BSE mid cap index going up about one and a half percent and the small cap also up just over one percent.
The oil and gas index rose thanks to those lower oil prices after OPEC plus decided over the weekend, as we mentioned yesterday, to speed up oil supply hikes. Shares of all the state-run oil refiners like BPCL, HPCL and Indian Oil were up quite sharply. Low oil prices obviously help the refineries as it can help manage their input costs or raw material costs.
The stock price of Mahindra and Mahindra was up, which also drove the auto index up after it reported March quarter revenue above analysts' estimates, thanks also to a strong demand for its sports utility vehicles. A deep dive into the auto sector and sales trends is coming up. On the banking side, Kotak Bank fell close to five percent after it reported a larger than expected drop in profit as provisions for bad loans surged.
And the issue of bad loans, particularly on the retail side, is something that's not going away and we will come back to it in the coming days. On Wall Street, stock futures were down after President Donald Trump suddenly announced tariffs on movies made outside the United States targeting Hollywood. Futures linked to the S&P 500, Dow Jones and Nasdaq 100 were down, according to CNBC, which quoted Trump saying on Sunday that he had authorised relevant government agencies to charge a 100 percent tariff on films produced abroad, calling efforts from other nations to attract film productions a national security threat.
It's not clear, says CNBC, whether those tariffs would impact movies shown in theatres or movies on streaming services. Entertainment stocks, not surprisingly, fell. All of this means that tariff tantrums will continue for much longer and could suddenly be expanded, as we've seen before, to include new categories, including ones that no one at all expected.
What surprises me, of course, is how markets seem to believe a thing otherwise and continue to assume the slightest pause or silence as positive news, while all broader indications point otherwise, which is also a good point to remind everyone that we are still on a pause when it comes to tariffs or reciprocal tariffs on countries like India and there is no resolution as yet.
Oil Prices Fall
Oil prices fell more than a percent on Monday after the Organisation of Petroleum Exporting Countries Plus decided over the weekend to speed up oil output hikes, so more oil in the market and therefore lower prices. Brent crude futures were quoting around $60.59 a barrel, so just under $61. Reuters pointed out that the June increase from the eight producers in the OPEC Plus group will take combined hikes for April, May and June to about 960,000 barrels per day, representing a 44% unwinding of the 2.2 million barrels per day of various cuts agreed on since 2022. An analyst told Reuters that the production increase instigated by Saudi Arabia is as much about challenging U.S. shale supply as it is to penalise members that have benefited from higher prices while flaunting their production limits. Meanwhile, brokerages like Barclays and ING have lowered their Brent crude forecasts following that OPEC decision. Barclays has reduced its forecast by $4 to $66 for 2025 and ING expects Brent to average around $65 compared to its earlier forecast of $70 per barrel, according to Reuters.
Rupee Strengthens
Falling crude oil prices and stronger Asian currencies lifted the rupee on Monday, taking it to Rs. 84.25 against the US dollar, up about 0.4%, after having strengthened even further in earlier trade but then lost some of those gains, according to Reuters. The dollar index was down 0.2% at 99.6, while the offshore Chinese one touched a near six-month high of 7.18, thanks to expectations once again of some closure in the trade war between China and the United States, which of course, as things are looking right now, is not showing any signs of resolution. Meanwhile, the big currency news was from Taiwan, even as Taiwan's central bank sought to suppress speculation on foreign exchange markets, saying that market chatter was partially responsible for the Taiwanese currency's two straight days of wild appreciation, of a kind not seen since the 1980s, according to Bloomberg. Taiwan's central bank governor said that they solemnly urged market commentators not to speculate irresponsibly about the foreign exchange market, as such comments could destabilise the market and potentially impact the broader economy. The governor also said that market commentary had triggered what he called excessive inflows from exporters and foreign investors into the Taiwan dollar.
Those comments came after the Taiwan dollar surged as much as 4.8% on Monday, along with a similar jump on Friday. This was the currency's biggest two-day gain in over three decades, according to Bloomberg.
Gold Is Up Again
A weaker dollar and fresh uncertainties about the future of tariffs helped gold prices rise, and this time about 2% on Monday. Spot gold was up about 2.5% to $3,313 per ounce. The dollar index, like we pointed out, was up about 0.4%, making gold more attractive. An analyst told Reuters that the U.S. dollar is slowing down and that's a positive for gold. More investors are betting that the Federal Reserve will cut rates relatively soon, after last week's U.S. GDP data came below expectation and now with what's going on with oil, referring to falling oil prices.
CNG Car Sales Overtake Diesel
Before we come to that, overall automobile retail sales in India rose just under 3% or 2.95% in April to about 22 lakh or 2.2 million units, according to the Federation of Automotive Dealers Associations of FADA on Monday. All vehicle categories except commercial vehicles grew. Two-wheelers were up about 2.2%, three-wheelers 24%, passenger vehicles 1.5% and tractors 7.5%, while commercial vehicles were down 1%. Passenger vehicle retail sales were up about 1.5%. The interesting developments in car sales are the composition of those sales. Electric vehicle sales have grown faster than previous months and CNG and LPG-driven cars, that's compressed natural gas and liquid petroleum gas-driven cars, have for the first time overtaken diesel. Broadly, CNG now is about 20% of cars, that is cars running on CNG or LPG, while diesel is around 18.5%. Petrol is still the largest fuel category at about 50%. On the other hand, hybrids are now about 8.5% and bigger than electric vehicles, which are around 3.5%. Electrics have done well relatively, but have still lagged or continue to lag behind hybrids for some time. I reached out to CS Vigneshwar, President of FADA, which represents about 15,000 automobile dealerships with about 30,000 dealership outlets. And I began by asking him, what were the major trends you were seeing in auto sales year-to-date, that is from January this year till April last month?
INTERVIEW TRANSCRIPT
C S Vigneshwar: It has been quite an interesting first four months of the year because it started off with the auto show, the Bharat Mobility Show. And during the Bharat Mobility Show, a record number of EVs were launched. And we can clearly see that the EVs were actually stuck in a gear in 2003-2004 at about 2.5%, give or take point, some percentage changes here and there. But now we've seen that EV has actually gone to 3.5%, which is fairly good growth given the base was low. And we also see that things are to come, alternative fuels are going to start playing a bigger role. In our press release, the first time we actually released figures regarding what is a pie, each of these fuels occupy diesel, petrol, even hydrogen, which is very, very small, of course.
EV is hybrids and CNG, LPG. We have seen that in April, petrol occupies 50% of the pie, which is acceptable. But we've seen diesel, from diesel being the king in passenger vehicles, it has actually come down to 18.5%. Your CNG and LPG has overtaken diesel to go to 19.67%. The hybrid versus EV, the work, EVs remain 3.5%, which is a good growth given they were at 2.5% for two years. But hybrids are at 8.4% of the pie. So I think the ambition of the government to reduce dependence on petrol and diesel is working quite well because a combined hybrid EV and CNG LPG market share has gone as high as 30% right now. So that is a good thing.
More and more customers are expecting such alternative fuel vehicles and more and more OEMs are also responding right now. Whether it is hybrids, EVs, whether it is LPG or CNG, more and more manufacturers are coming into this. And I wouldn't be very surprised to see in the next few years, this combined pie going past 50%.
Fuel breakup that you just gave, that's only for passenger cars or is it for all vehicles? It is only for passenger cars. Likewise, in two wheelers, it is 94% petrol, about 5.4% EV. When you look at three wheelers, it is 63% EV, 11% diesel. So then CNG is about 26%. When you look at commercial vehicles, it is 84% diesel and about 10.5% CNG. Three wheelers, which we've been seeing for some time now is the one category where we've seen huge EV adoption. So this is going to continue to happen. The last mile delivery e-commerce is becoming a bigger and bigger direction where customers don't want to go and shop.
They would rather sit and order things from the comfort of their homes on their electronic devices. So this is going to become a bigger, bigger thing to contend with. But one very interesting thing, which you also need to talk about, we talk about pollution from different forms in the industry, different industries in the economy giving different pollution.
We also need to go and check the pollution levels, which are coming off these packages, these last mile deliveries. It will be very interesting to watch. This is something perhaps we cannot avoid completely, but is a way where we can bundle these packages.
All these things would perhaps be from the plastic point of view.
Govindraj Ethiraj: On the consumer side, how are you seeing demand? I mean, for example, let's say how many people are taking loans to buy their cars or rather, is there any shift in that number that you're seeing and overall consumer sentiment and what kind of models are they buying more of?
C S Vigneshwar: So regarding the purchase of finances, it keeps changing according to the industry. According to the north, south, east, west of India, there's a slight change in it. But however, we've been seeing in the last couple of months that the banks and financial institutions are becoming more stringent and tighter with their lending. We also saw that when we introduce a customer to the banker and when the banker pays us, it's becoming longer, more loan rejections are happening.
Apart from that, another thing we are noticing is that banks and financial institutions are asking for more and more documents to process. So this is a small impediment to growth. Of course, RBI is also looking to bring more liquidity into the market.
So all these things will help. The market, when you look at it, we are seeing the premiumization of the two-wheeler market. More and more customers want the premium products.
We're also seeing that in the commercial vehicle segment, a lot of the middle-sized vehicles are becoming less and less sold. Either people are graduating to smaller vehicles or to extremely large custom vehicles. But you look at the passenger vehicle segment, it's again quite interesting there.
We have been having a lot of EVs which have come into the play and alternative fuels are pushing, hybrids are pushing. So we are finding that this is quite interesting and we are seeing that the rural markets in any segment are playing a bigger role compared to what was two years ago, compared to what is happening in urban areas. In the urban areas, we are seeing that the cost of the vehicle has gone up multi-fold compared to the salaries of the urban customer.
So there is a lot of paper which probably all of us need to work on.
Govindraj Ethiraj: Thank you so much for joining me.
C S Vigneshwar: Thank you. Take care.
Mumbai's Sales Boost And National Trends
Registration of properties in the Mumbai municipal region rose about 12 percent to just over 13,000 units in the month of April. That's last month on better housing demand according to real estate consulting firm Knight Frank India. April 2024 saw about 11,648 units.
Knight Frank said that Mumbai city recorded 13,080 property registrations in April and in March 2025, the total registration stood at about 15,000 units. But for April, apparently this was the best April in about 13 years in terms of property registrations. Now, Mumbai's strong sales numbers do not necessarily reflect a national trend and numbers appear to be diverging between and across markets and cities.
I reached out to Ghulam Zia, Senior Executive Director, Research Advisory, Infrastructure and Valuation at Knight Frank and I began by asking him to give us a sense on overall trends this year so far and his outlook ahead.
INTERVIEW TRANSCRIPT
Gulam Zia: At the macro level, it suffices to say that things haven't changed much if you talk about last year to current year. A lot of them want to start talking about a downfall in real estate, but it hasn't yet been so visible. So if I talk about mega trends in terms of cities, it suffices to say that it is essentially NCR and Bengaluru where we are getting some sense of cracks appearing.
But these are again superficial because it's too soon to conclusively say that markets are changing even in those two cities. But the other cities like Mumbai and Pune are coming up with very different perspectives, and the number of transactions are huge. Chennai and Hyderabad, actually Hyderabad is also slightly softening but Chennai is doing well.
So different cities are behaving differently right now. So there is no one trend fitting all cities, that's one part. But in terms of product type, the luxury continues to be the flavour of the day which defies even the regionalities.
Like luxury is doing well in Gurgaon, in Delhi. Luxury is doing well again in Bengaluru and of course in Mumbai and Pune, luxury is doing fantastic, fabulously well. So luxury is one segment which is kind of eating into the mid to low end of the market because every developer worth his salt is actually shifting to the low hanging fruits and trying to enjoy the benefits of doing luxury where it is selling like hotcakes.
But in the low end market, nobody is touching. So affordable housing is the biggest loser in this entire game of luxury markets going up and that's where I am worried because in times to come with Pradhan Mantri Awas Yojana 2.0 already rolled out last October 2020, and now the home loan interest rates are softening. So that cycle has also begun.
So with these two, of course the interest rates are impacting the lower end of the market the most and the reason why the transactions are not picking up, one of them was interest rates going high. Now that it is softening up, as well as Pradhan Mantri Awas Yojana benefits are also coming along, I am worried that in times to come there will be huge demand for luxury housing but no supply because every developer is catering to the upper end of the market alone. So these are a few key trends I wanted to bring up to you.
Govindraj Ethiraj: Right, after a while you're seeing this kind of variance between cities and city pairs like you talked about Mumbai-Pune, Bangalore-NCR and Hyderabad which is on a slightly different path because usually they all cities were at least for a couple of years seemed to be all moving in the same direction.
Gulam Zia: Yeah which was true, when things were falling apart pretty much every city was going through a tough time but NCR has actually had much longer a recessionary period than other cities whereas Hyderabad had actually moved out of those shadows after settlement of political issues etc. So the last 7-8 years were a good bumper year for Hyderabad because it was kind of starting afresh, kind of starting with a new chapter altogether. But even there a fatigue has crept in, so while you're right more or less most of these cities do you know gradually tend to behave in a same manner but this is that time when there is a little dynamism because all you know this is a signal that the markets have saturated in times to come, you need to worry about the cycle changing and it is right now appearing in as I said NCR and Bangalore, in times to come other cities may also follow suit. So this is what I want to tell you that this could be one of the early signs of a fatigue creeping in the market.
Govindraj Ethiraj: Right Mumbai seems to be not seeing any fatigue because you've got 13,000 registrations last month. How are you seeing Mumbai, is it powering ahead on a completely different trajectory as compared to other places?
Gulam Zia: Well here I would also want to highlight why Mumbai has been doing so well on the luxury side of it, of course it was a huge amount of wealth created on stock exchanges, on equity markets etc. So a lot of those profit bookings have flown into real estate but the last six seven months have been different on that front. So again I'm worried from the demand side, supply side of course is going great guns right now but how long will it last is a concern and in my view the way things are poised I don't think it will continue the way it has been going on for the last two or three years.
So signs of cracks may not have been evident yet but it's a worrisome situation because there is a limitation to the demand that we always thought and every developer you know typical herd mentality is focussing on super luxury, the upper end of it but there will be a limit to how much of demand would you have there and that is already there are concerns rising in that direction.
Govindraj Ethiraj: Right and if I were to now ask you to give us an outlook for the next few months which is a little more composite what would you say as in where are you feeling optimistic if within this and where are you not feeling so optimistic?
Gulam Zia: Well overall I'm not a pessimist, I'm not really thinking of much changing in the next quarter or two because even if it's an early sign of some slowdown in a few markets I would say I have to really look at rolling averages of the last eight to ten quarters. I can't just talk about one quarter because it can be an outlier. So I would watch out I don't want to believe that there is much of a change happening in a quarter or two maybe four five quarters things may start slowing down very very prominently and conspicuously but for the moment we have to pick up those small changes small signals emanating from here and there and those signals are talking about slowdown but otherwise at a macro level things are going pretty steady for real estate industry per se.
Govindraj Ethiraj: If there is a certain sense of consistency is it because more of it is being driven by investors or is that number changing in any way?
Gulam Zia: Well it still is not too much of an investor driven market let's be clear because a kind of pricing in any case last two three years the price rise has been pretty high an investor would not be very comfortable coming in at such high prices so I whatever numbers or whatever estimates we have it still is not crossing you know double digit maybe 10 15 percent of investor it is still hugely driven by end user demand and spatially the upper end of the market is not so much of an investor driven market can you imagine somebody buying a 100 crore apartment expecting in next five years to sell it for 200 crores obviously not so this is more of wealth preservation as far as its upper end of the market concern the term is wealth preservation they're not looking at doubling up the prices but if they spent 100 crore after 5 years 10 years they're getting 110 they'll be happy so it is not so much about investor driven demand it's essentially the end users who want to really upgrade their lifestyle who want to tell the world out there that I have arrived so it is more driven by that passion which the transactions are going ahead but nothing to do with investor side of it.
Govindraj Ethiraj: Right and if I may supplement that last question for example in Gurgaon we've seen these big sellouts reports of 20-25 percent NRI investments and therefore investors so is that a standalone trend I mean does it run parallel with anything else anywhere else in the country?
Gulam Zia: I suspect because NRIs are not so dumb to invest where in any case they are feeling the heat of a softening currency so while the price rise could still be a reasonable say 9-10 percent or so but in front of any of such price rise if your currency devaluation is going to haunt you in future I seriously doubt if NRIs are falling for it yet unless your price rise would be 20-30 percent per annum it doesn't make a sense for a NRI to invest in India yet.
Govindraj Ethiraj: Gulam pleasure speaking with you as always
Gulam Zia: Thank you so much. My pleasure, all the best, take care.
