On Episode 921 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Bagga, Veteran Market Analyst as well as Radhika Rao, Senior Economist and Executive Director at DBS Bank.

SHOW NOTES

(00:00) Stories of the Day

(00:50) Foreign Portfolio Investors Are Returning To Indian Markets, One Trade At A Time

(04:19) Nato Meet Kicks Off In Turkey

(04:55) India To Supply Missiles To Indonesia And Partner For A Port

(05:48) The Trend Shifts Within Indian Markets As Financial Stocks Lead The Pack

(20:26) How Low Oil Prices And Other Positive Macro Signals Could Help The Economy

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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.

Good morning, it's Wednesday the 8th of July and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital and still rained out.

Our top stories and themes…

Foreign portfolio investors are returning to Indian markets one trade at a time.

The trend shifts within Indian markets as financial stocks lead the pack.

How low oil prices and other positive macro signals could help the economy

The NATO meet kicks off in Turkey.

India to supply missiles to Indonesia and partner for a port.

Markets, FPIs, Nato and BrahMos

Foreign portfolio investors are tiptoeing back into Indian markets after the break and some sectors are looking more attractive than others and more on those in a moment.

Citigroup's India team returned from meetings with 36 US lines saying appetite for local assets is reviving according to a report in Bloomberg. Now this is obviously a contrast to the situation for almost two years now where brokerages both overseas and Indian said they were either not getting meetings with big overseas funds or the outcome was nothing to write home about. Macquarie Capital Securities is seeing a pickup in customer queries after an extended lull.

Goldman Sachs has turned more positive and Barclays says it may finally be time to view the world's fastest growing major economy as an investment opportunity according to that Bloomberg report. Broadly pressures are easing within India as macro signals like oil prices are looking good while externally investors are reassessing their exposure to the AI boom and more on those macro signals later in the show. Citigroup's India CEO said in an interview that the 18-month long negative cycle on India is eclipsing fast.

Investor sentiment is on the cusp of changing. They are beginning to think about India with the fiscal deficit narrowing and the rupee coming out of the route loop. Another fund manager of Copley Fund Research said that given the concentration risk sitting in Taiwan and South Korea it's hard to imagine active emerging market managers not rotating back into China and India.

The average portfolio weight amongst active emerging market fund managers is at the lowest levels in 12 years for China and six years for India. And reflecting some of that the Nifty50 and Sensex was strong on Tuesday when it started off but then lost the gains or some of the gains and thus snapping a four-day winning run on Tuesday. The indices are still near 10-week highs though the markets turned negative in the last half hour of trade presumably because of profit booking.

The Sensex fell about 104 points to 78,180 and the Nifty50 was down 31 points to 24,398. The broader markets were down two the Nifty mid cap and small cap were down 0.3 and 0.55 percent each. Oil prices were up on Tuesday and that could have maybe affected at least sentimentally the Indian markets after reports of attacks on ships near the state of Hormuz revived fears of disruptions.

Brent crude futures were up 60 cents to about $72.60 a barrel on Tuesday morning while US West Texas Intermediate or WTI crude was at about $69 a barrel. Global markets were surprised or shocked after stocks fell despite blowout earnings from Samsung Electronics clearly suggesting that investors wanted even more. Samsung which is also the world's largest memory maker by market value saw its stock price fall almost 11 percent according to Bloomberg adding that its quarterly report failed to wow traders even though its profit jumped 19 times thanks to which peers like Micron technology and SanDisk also fell about 5 percent in US premarket trading and Nasdaq futures were down 2. SpaceX has joined the Nasdaq index on Tuesday.

Elsewhere artificial intelligence is likely to enhance productivity significantly but any such impact on economies may still be years away. Deutsche Bank analyst Jim Reid told Bloomberg television. Reid is an economic historian who is global head of macro and thematic research at Deutsche Bank and he also said he's excited about the technology's promise and predicted it will create jobs but in the long run.

In major geopolitical development some 32 NATO leaders have gathered in Ankara Turkey for the 36th periodic summit that started on Tuesday and will go on today. On Monday NATO's Secretary General Mark Rutte called for the allies to present clear concrete and credible plans to reach the organisation's spending targets. He said that President Trump fully expects all allies to step up immediately and get on the path to five percent and do it with urgency.

Translation, NATO members will unveil tens of billions in new arms contracts on the sidelines of the summit as they attempt to show Trump that they are delivering on defence spending pledges according to a Bloomberg report. Speaking of defence spending India will supply BrahMos supersonic cruise missiles and Astra air-to-air missiles to Indonesia according to a Reuters report even as India's Prime Minister Narendra Modi started his two-day visit to Jakarta. Sources told Reuters that the deal worth about 630 million dollars would likely be signed right now and BrahMos missiles which have been developed by India and Russia are amongst the world's fastest cruise missiles and can be launched from land sea and air platforms.

The two nations are also going to develop Indonesia's Sabang port located near the strategic state of Malacca according to a PTI report. The project roughly 100 miles from India's great Nicobar port project is expected to complement the planned transshipment hub and boost maritime connectivity in the Indo-Pacific. India is also planning to invest in manufacturing facilities in Indonesia for steel, nickel and rare earth permanent magnets according to that report.

What are the Trend Shifts in the Indian markets?

Foreign investors are returning and more specifically to Indian financial stocks with the sector drawing its biggest fortnightly inflows in 14 months in the second half of June after a series of steps from the Reserve Bank of India and the government and also lower valuations and expectations of steadier earnings lifting demand according to Reuters. Foreign portfolio investors bought about one and a half billion dollars worth of banking stocks in this period according to national security's depository data released on Tuesday. The inflows do mark a turnaround after all the record foreign outflows from Indian markets earlier this year when investors took out money to invest in other markets including of course those housing the hot AI stocks.

Last month the government and Reserve Bank of India unveiled a series of steps to attract foreign capital including for bonds and removing the 20% tax on interest income from such investments. Bank stocks gained about 6% in June, this is obviously ahead of the nifty 50's 1.4% rise. A chief investment officer at Lighthouse Canton told Reuters that his sense was that the worst of FPI selling was over and outflows would reduce significantly.

I reached out to Ajay Bagga, veteran market analyst and I began by asking him how he was reading the latest trend shifts in the market and what that added up to as we looked ahead.

INTERVIEW TRANSCRIPT

Ajay Bagga: Definitely, you know, we are getting a few days where FPIs are turning positive on a net basis. So, we are looking at exhaustion of that FPI selling setting in which will be very positive for the markets. It's happening right after September 2024 that we are seeing some amount of abatement of the FPI selling.

The first sector I think that's getting good thumbs up is financials and within that private sector banks are looking quite attractive. Credit growth is high. FCNR money once it comes in, that will again give a boost to banks lending prowess.

Credit costs seem to have bottomed out quite low. The microfinance rag has largely got written off. So, overall, I think private sector banks are looking good and BFCs are looking good, vehicle financiers, for example, home loan companies.

And then the entire capital market related, especially the AMC space, seems really set for huge growth ahead. RAUMs by GDP for the mutual fund are about 20%, as against a 60-70% in developed markets. Some markets are 100%.

So, you have a GDP number that's growing and you have formalisation, financialization also working. So, AMCs and other capital market players should also do well.

Govindraj Ethiraj: Right. So, you mentioned FCNR flows, which is really NRIs putting money into India for attractive interest rates. How does that help the Indian banking system?

Ajay Bagga: Because you will get funds, you can park the dollars with the RBI, they will give you rupees without any drag of CRR, SLR. So, that is cheap money available for three to five years. So, cost of funding should come down.

This is that because the drag of the 4% CRR and the SLR is not there. So, it will mean 100% can be lent out on three years, five years basis. They will have a maturity match.

We are expecting anything from 50 to 70 billion dollars to come in. So, that will be a boost for the banks. Shahrukh- Right.

Govindraj Ethiraj: And you talked about financials all benefiting and more so private sector within that. So, is this overall a lead indicator for other parts of the economy? I mean, and which is why they're all going up?

Or is it a standalone phenomenon, so to speak?

Ajay Bagga: No, it's part of the economy. You're spot on there. And if you look at our leading indicators, auto numbers came very well, very strong for June, for example.

Two wheelers are seeing exports also picking up. There is an EV move overall. Auto ancillary is doing well.

The input costs have been coming down. So, that's going to help in the next quarter, not in the past quarter. So, market will look at the management guidances.

We fairly know April to June will be our dragging quarter. So, that has got factored in the markets, but markets are looking ahead, being forward discounting mechanisms. So, overall, banks are sitting in the centre of the India growth story.

And the private sector banks are more agile. Their credit growth is faster. They're able to get deposits also, unlike the public sector banks are dragging on the deposit growth.

So, somewhere they will either have to raise more funds, which the government will largely do as OFS, rather than coming into the banks. So, government has a big divestment target of about 80,000 crores. They've raised about 18,000 crores already.

I think some of the banks and LIC will see OFSs, but there the companies don't benefit. The government will benefit as a promoter selling out.

Govindraj Ethiraj: Right. And you said that banks are, or the financial system is really in the centre. So, what are you seeing on the other side or both sides?

Ajay Bagga: The construction and industrials are doing very well. So, the government capex remains quite strong. That should benefit.

There is a power build-out. There is a lot of things happening on the energy security front. So, renewables will do well.

We are a follower as far as, say, somebody like China building out, but we are now emerging as a very strong second to China in terms of renewables. So, anything to do with renewables, energy security, the power segment, you will have to do huge transmission and grid setup. You would have seen how four Chinese firms have been allowed into the power sector.

There was some amount of volatility based on that. But the government has made a very wise decision that the equipment has to be made in India. So, you should have a manufacturing base in India and then you can go ahead, even if you're Chinese-owned.

So, the government is realising that we will have to build out the traditional power, grids and power generation capacity, as well as grow the renewables. So, we are sitting on that cusp. So, all these will do very well, Govind.

Construction, industrials, power, the entire energy security, renewables, all these should do well.

Govindraj Ethiraj: And what's the market analyst or stroke analyst view on the consumer side in terms of... I know cars, as you mentioned, we've seen very strong rather record sales month after month. But if take out cars, what's the rest of the consumption economy looking like, again, from a market perspective?

Ajay Bagga: So, the fear is on the monsoon, the El Nino effect, that will be a drag on the rural economy and this festive season could be a little bit sombre in terms of rural growth. So, that we have to wait and watch. But the government has made its intention clear.

They have plans for 110 districts, which will be monsoon deficient as per the government proposal. So, the old playbooks are being dusted and getting ready. What happens then is staples being already priced to perfection and on the valuation being on the higher side will lose out to the more discretionary.

So, the higher income pockets will continue to spend while the mid-tier and the low-tier income pockets, especially the rural poor, might get impacted. So, no one will starve. The government will ensure that there is enough work and there is enough food.

That very much we have seen in the last two times as well. We have that capacity now, but the demand goes down. So, the discretionary demand starts coming down.

So, I would say urban discretionary will be a better place. So, autos, two-wheelers, these will probably do well. The electrification theme.

So, the EV orders coming from state governments, city governments, like Delhi Play Store is talking of a 5,400 crore build-out on the domestic bus, the Delhi bus services. So, those kind of orders will help these companies. Paint companies are benefiting from the oil prices going down.

That should continue. Those are some of the segments. So, more the consumer discretionary than the consumer staples.

Govindraj Ethiraj: Right. And we've all been watching the AI trade phenomenon in the rest of the world or other markets. Do you feel that if the AI trade were to diminish in some way, as it is in some markets at least, we will benefit or we will have to wait for a fresh round, so to speak, which is more directed to markets like India?

Ajay Bagga: You know, we are seeing already three plants have gone live on semiconductors. Ours are very low level at the real starting level of memory chips, but it's starting. What we have seen, say in electronics, how over the last five years, we went up multiple times on the EMS space, the electronic manufacturing space.

I think semiconductors also over the next five to ten years, we will do that. Markets will discount within the next two years. So, that's on the hardware part.

But on the software and data centre, I think data centre will see a lot of demand. Again, they are very capex heavy and obsolescence is very high. So, I would really look for careful on that.

I think there will be a lot of accidents there. But where the Indian IT will come into itself and what say Anandanil and Kenny spoke in the Infosys AGM, those application developments. So, nobody's going to write machine critical or enterprise critical software on AI, but they will do a lot of embedded stuff all over it.

So, our companies will still stay in the core, but they will write a lot of application layers for companies. So, that enterprise applications has to start. We saw HCL Tech announcing one very big order for that.

What we were thinking earlier was it will be a Y2K moment for Indian IT. It's not translated. Last two years, we have not really got those orders yet.

The preparation is there. Now, let's see how that comes. And that will be the fifth part of the AI.

So, you start right from the ones making the memory, then the companies like NVIDIA, which make it into a huge processor. Then you have the supply and power. Then you have data centre companies and the cloud companies.

And finally, you have the enterprise software companies, which is where our companies are sitting. So, now the rubber is really hitting the road. This year will be a make or break.

Good news is we are going at very low expectations, very low level of ownership, institutional ownership has been negative for the last two years. And also, the expectations are very low. So, any positive momentum there, like as we saw, say an HCL Tech announcing a huge order.

If those start coming in, then you could have a re-rating quite fast, not cheap, still 20 to 30% more expensive than similar companies in the space abroad. So, we are not cheap yet on the IT segment. It's not like, say, 2003, April, where you could close your eyes and buy and you would do very well.

That kind of mayhem has still not happened because they are maintaining their cash flows, their basic performance has been there, growth has been lacking. Growth will come from enterprise solutions for AI.

Govindraj Ethiraj: Right. So, you do feel that we will see or could see portfolio investments, that's foreign portfolio investments shifting to India because they may start, let's say, reducing their exposure to the AI play in markets like Korea, Taiwan, or for that matter, even the United States.

Ajay Bagga: Very tough to say. I think that AI momentum stays maybe a year, two years. It will eventually, it will be like what Warren Buffett always talks at 2000 auto companies in the 1920s and three were left eventually.

That play has to go on, or the fibre optics in the dot-com time. So, we are still, I would say, in an industrial bubble, not a financial bubble in that. And there is enough money which is chasing this AI momentum.

And it has become a virtuous circle. When you spend $800 billion, even in an economy of the size of the US, $800 billion is 3% of GDP. You are really putting in massive amounts.

That is what's driving the US growth. That is what's driving the earnings growth in these sectors. What will be interesting is the ROE on these, once that starts getting questioned by the markets.

Like today, we saw Samsung coming in with 19 times profits, 19 times profit growth, and the stock went down 7.5%. Cosby itself went down 8%. So, the expectations have become so high. And what is baked into the price already, say, SpaceX sitting at 90 times sales already.

So, you are baking in so much into the stocks. At some point, reality hits. I don't think we are at that point.

We are not at that euphoric zone yet. Everybody is still sceptical, still sceptical. But you won't see a rotation from that into India.

What India will get is, if we show earnings growth, and then these financials and all these start performing, people will allocate some money. What has to go is the tax on the FBIs. Any number of FBIs I've spoken to, they're saying, why aren't your regulators listening?

It doesn't happen anywhere else in the world. It's a big drag on us. You have a rupee which weakens, and then you tax us.

We have seen that on the debt side. The moment that was removed, 30-40 thousand crores have come in, in June itself. So, if that happens, Govind, it's a game changer.

Then this market, it goes into blue sky zone. If the government takes a stance like that, I don't know if they are considering it. It's really holding back the FI flows to some extent.

But the secular flows will start coming in into the growth segments. IT, I don't know if it is still a growth segment for us. So, maybe they will come into more infrastructure, construction, financials, AMCs, capital market related.

We see growth there. Telecom, for example. Maybe it will come there.

Govindraj Ethiraj: Good note to end on, Ajay. Thank you so much for joining me.

Ajay Bagga: Thanks for having me.

What is the weather forecast for this week in India?

The Indian meteorological department has forecast heavy to very heavy rainfall over several parts of the country during coming days as the active monsoon phase persists. Cities like Mumbai of course are continuing to be battered with considerable flooding particularly in the northern parts of the city.

But heavy rainfall in Mumbai is not just changing the weather but also helping investors. The country's first weather derivative contract, Rain Mumbai, is doing well now. During the first week of July, it has rallied alongside the rains growing or rather rising more than 12% this month according to a report in the Business Standard.

NCDX, the exchange, had launched the country's first exchange-traded weather derivative contract on the 29th of May. It's based on rainfall data for Mumbai and is linked to the city's long-period average rainfall of 2,206 mm. The contract has a multiplier of Rs.

50 per mm, meaning the value changes by Rs. 50 for every 1 mm change in rainfall it has been developed with technical support from IIT Bombay and based on official data from the IMD.

What are the Positive Macroeconomic Signals for the Indian Economy?

Oil prices are around $71 a barrel, an unimaginable number a few weeks ago.

Much of the downstream impact on India's economy was linked to high prices, including of course the external economy and the current account deficit. With oil prices down now and pressure thus easing on several macroeconomic fronts, what is the prognosis looking like and how is India looking as it emerges from the latest bout of troubles when compared to other economies in the region? I spoke with Radhika Rao, Senior Economist and Executive Director, DBS Bank, based out of Singapore and I began by asking her what her cockpit view of the region and India's macro was looking like right now.

INTERVIEW TRANSCRIPT

Radhika Rao: I think this kind of takes India back to the organic growth rate that was happening earlier, right? So fiscal 26, growth ended the year at a very strong note, about 7.7 percent, which was in line with our expectation. Now for fiscal 27, we have taken growth up.

We do think it could be closer to 6.87 percent. In fact, for the full year, looking at where oil is at this point and assuming that it holds. So growth has come back to a strong beat, again 7 percent plus If you look at the region on a whole, you know, some parts of Asia, for example, North Asia, that have really benefited.

So I'm looking beyond these equity market action and related flows. If you just look at growth, there have been positive spillovers, either by wealth effects or by that segment doing very well. And you have seen growth anywhere between 8, 10 percent in developed countries as well and some emerging markets.

So I would say compared to that, India's growth rate is still holding up relatively well, despite not having these kind of big digit drivers, which are quite, I think the growth rate is a bit skewed at this point. So going back to India's case, so yeah, I think we're taking the oil problem out of the equation, thus bring growth back to 6.87 percent. The other thing, of course, front and centre and you being in Mumbai, and we just started off talking about this before the call, monsoon is doing a very, very quick catch up.

Still, we have a long way to go for this entire monsoon season ends. But that is another thing to watch quite closely. But agriculture is a smaller part of the economic balance, so to speak.

But nonetheless, a very important one, because it does employ a majority of the workforce.

Govindraj Ethiraj: Right. And when you look at central bank policy and policy response, and if you were to contrast that with what you've seen in the region or are seeing in the region, where do you think we stand right now and where could we be going or ought we be going?

Radhika Rao: What a very important question, because I do remember going into the June meeting for the RBI MPC, there was a very strong case being made by a few quarters, a few market participants, that the region is hiking rates. Bank Indonesia, BSP, that's a Philippine central bank, has gone to high rates and some developed market central banks as well. And India should follow suit, because given the macro mix that we were in, rupee was falling, inflation, the wholesale inflation indices, producer price indices were up, not so much the retail inflation.

We were holding on to the view that nuances matter. It's not as simple as saying that the region is hiking and so should India. In fact, Bank Indonesia was hiking rates.

In fact, they've hiked by 100 basis points between May and June. And that's because of the currency alone. They have currency stability as a part of their enshrined mandate, hence their reaction.

The Philippine central bank inflation was running way ahead of targets. Again, not surprisingly, they did flag a hawkish tilt and then they followed up with rate hikes. And developed markets had drivers of their own.

In India's case, we have not really seen a history of the central bank using policy rates to address rupee risks, at least not immediately. Liquidity, non-rate measures are usually the mix that are used. And that's what we anticipated.

Govindraj Ethiraj: And linked to that, one of the reasons for bringing in or incentivising currency flows, including from non-resident Indians, is to obviously create a stronger floor. To what extent is that working in your mind? And do you feel that the currency needs more intervention or could it be let go to some extent?

Radhika Rao: So in the initial part of dollar rupee correction or the rupee strength was driven by expectations, right? There was an expectation that there's going to be very strong FCNR flows, there's expectation that it's going to be very strong ECB flows. Since those schemes have kickstarted, we are seeing the numbers, high frequency numbers are available.

We know what the strength is, but it's quite clear that the inflows should start pretty much soon. ECBs, we've already seen from our own conversations and what the banking industry is looking at, a pretty strong interest among especially the PSU names and the broader universe as well. Now, for the rupee, we did see a brief appreciation back into the 94 handle and thereafter we have come to stabilise around the 95 mark.

And I think that is a function of two things. Just as this flows conversation was going on, we have had the dollar stabilised or index go back towards a bit more than 100 marks. So kind of offsetting some of this impact.

But I think more than this, I don't think there will be additional intervention. Honestly, in June meeting when these non-rate measures were announced, I really think RBI went ahead to tick all the boxes, from debt flows to these non-resident flows, offshore borrowings, everything that outside of FDI or equity portfolios, I think everything was touched. So that will help really bring the BOP back to a surplus this year.

From market estimates were anywhere between, I would say 40 to 65, 70 billion BOP deficit. From there, we have swung to a forecast of surplus. So that is a fundamental support for the currency.

So I do think, again, to summarise, we do think that the rupee would probably oscillate between the 94-95 kind of handle. We have a dollar rupee forecast of, I think, below 94 in the September quarter. And thereafter, it edges back towards a 94 handle.

And that is all driven by the fact that we expect BOP support from capital inflows coming in. But longer out, I think the dollar rupee, we expect it to go back higher. And that is, again, driven by the point that flows, the central bank would prefer to, the authorities would prefer to kind of beef up reserves again and prefer to keep it on a slightly depreciating part, even the larger growth-related goals that the country has.

So yes, short term, we do expect appreciation in the currency. I think even the US Fed expectations are now getting a bit tempered. I mean, markets turned very hawkish.

Now they're coming into the view that probably Fed, the new chair was not as hawkish as was interpreted or as perceived. So when that dollar correction reoccurs, you will see dollar rupee also come back again towards the 93 handle. But beyond that, we expect it to go up again.

Govindraj Ethiraj: Right. I mean, you sit in Singapore, so you have a slightly different view of the region and more holistic. So tell us about what you're seeing across the region and essentially what's your view looking like?

Radhika Rao: Just like the tariff shock, the oil shock has also hit most countries asymmetrically. So we have had countries in the region which are, I would say, especially if I narrow it down to ASEAN, you know, you've got countries that are rich in resources, commodities, oil and gas. They have been relatively unscathed.

Dependency on imports is not very high. On the other hand, we have had countries, including Thailand, as well as India, where have high dependence on imports of energy inputs. It's been asymmetrical.

I think the impact has also been similar because impact on inflation, for instance, some of the countries that have, I would say, policy filter, right? If you have got subsidies, inflation impact has not been very big. Countries like Philippines, where there are very limited fuel subsidies, inflation has moved up a lot.

So from that point of view, certainly it's been asymmetrical. Now, coming out of this, I think if we were to then again return to familiar themes, we see a difference between countries that have, for example, higher export-orientated growth. And in that export-orientated growth, if they have a higher electronic semiconductor chip, the related exports, we again see a divergence happening there, right?

We have seen very strong pickup in countries, exports like Singapore, like Vietnam, of course, North Asia, double-digit, very strong exports from Taiwan, from South Korea. Those countries' exports have really taken off very strongly. And then they've got other countries where exports are doing well, but you haven't seen that kind of very strong 15%, 16%, 20%, 25% kind of growth in exports.

So again, post the oil, then we return to this electronics and AI and semiconductor, that kind of a mix, especially if the country is export-driven. Growth overall, I think certainly will be devised up for the region as a whole, if you assume our baseline oil forecast. And the revision will be much more if you are a will be probably a bit modest and driven more by domestic drivers.

That's how the mix is playing out. And on a longer term basis, structural basis, I think the energy security piece is going to be very important for the region as a whole. This has kind of exposed which country has how much strategic reserves, you know, is there a need to build more?

Encouragingly, in India's case as well, you know, five more plots that work, the works, I think that has been reopened, especially in Mangalore and broader Karnataka, they're going to be two spaces. These programmes are being rethought off, because I think it's very crucial. Now, the premium around Middle East is going to go up.

So first it was the Red Sea, now it's the Strait. So longer term energy security is, I think, another big thing that certainly is going to be talked about in the market, especially I would think in the policymakers or government circles.

Govindraj Ethiraj: Right. Again, from an India point now, so you know, we're all breathing collective sighs of relief that at least for now, we're seeing some sort of conclusion to the war in West Asia. Are there any surprises that we should still be looking out for?

That's one. Second is, what could take us back to, let's say, more powerful growth triggers, or what could lead to them? Or what should we be doing to generate them?

Radhika Rao: So far as the first part of your question, I think it is still, I would say, less fluid than it was, say, a month or two back. I think right now, it does look like the stakeholders or the key actors in the West Asia conflict are also, you know, looking at dialling down the tensions, having seen what impact it has on global markets, their own markets. And, you know, it could affect their own political careers.

So kind of you have seen a dialling back across the board. So that lends itself to the belief and hope that, you know, we will not be there back soon enough, 30 days or 60 days of ceasefire expires and see if that becomes long lasting. But I think you can see a much more political will to, you know, calm things down.

So which is a good thing for the markets on a whole, as well as the economies that are involved. Now, coming back to India, and you're talking about longer term measures, I think what has been set into motion, especially in the past two years in trying to in attempts to be a bigger part of the global supply chain, I think that ought to continue. I think there is no two ways about it, that if to increase the contribution or the share of manufacturing as a percentage of overall GDP, I think this is the way to go.

There are a few sectors that are really leading the show at this point. India has done very well, especially on the electronics, you know, mobile phones, that part of the value chain. If we were to expand that more to chips, move up that curve, I mean, explore EVs, some part of the value chain, again, doesn't have to be, you know, the top end, because top end is not only expensive, it's not very labour intensive.

So, you know, that might not reap benefits for the employment part. So I think continuing that part will be certainly important. And the other one would be, to my mind, strengthening ties, you know, FTAs were really on a fast track last year.

I hope, you know, that also continues, because multilateral agreements, we've been a bit lukewarm, but bilateral, you know, the authorities have been very forthcoming. So that continues, I think that's going to be another very big push. So these things, again, don't eke out results, six months, one year.

But when you look at the trade picture on a whole, it certainly has its own benefits. So I would say these two paths, to my mind, besides many others, you know, we, of course, we talk about reforms and all that. But I think if you want to give concrete examples, move to be a bigger part of the global supply chain, and to strengthen ties with countries around the world outside the US are two very big drivers, we think will certainly strengthen India's structural strength.

Govindraj Ethiraj: It's a good note to end on, Radhika. Thank you so much for joining me.

How much of India’s power is Renewables this year?

The share of renewable energy in India's electricity mix has risen to a record high in the summer that just went past, with renewables accounting for nearly 19% of electricity production in the quarter through June, according to calculations by Bloomberg based on India's power ministry data. Coal contribution remained flat at nearly 70%.