Geopolitical Tensions Are In Full Sway Over Indian Markets
India's economy is expected to grow at 7.4 percent in the year ending March 31st, 2026, according to the National Statistics Office of the Government of India
On Episode 768 of The Core Report, financial journalist Govindraj Ethiraj talks to Vandana Hari, Founder and Chief Executive Officer at Vanda Insights as well as Gulam Zia, Senior Executive Director, Research Advisory, Infrastructure And Valuation at Knight Frank.
SHOW NOTES
(00:00) Stories of the Day
(01:09) Geopolitical tensions are in full sway over Indian markets
(03:31) Rupee rises above Rs 90 to the dollar, at Rs 89.88
(03:55) India’s advance GDP estimates reinforce the resilience theme
(06:25) How America’s move to bring home Venezuelan oil will affect global markets
(16:50) India’s residential market slowed in 2025 but commercial real estate set new records and 2026 outlook
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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 Thursday, the 8th of January, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital. Before we start, a week is already over in the first month of 2026, and of course there are 11 more months to go.
Our top stories and themes…
Geopolitical tensions are in full sway over Indian markets as well, and that's really the context of where we are in terms of the beginning of the year and what we are still looking ahead at.
India's advanced GDP estimates reinforce resilience.
how America's move to bring home Venezuelan oil will affect global markets.
India's residential market slowed in 2025, but commercial real estate set new records and a 2026 outlook for both of them.
And the rupee appreciates goes above 90 rupees to a dollar to 89 rupees 88 paise.
Economy Strong, Markets Not Quite
India's economy is expected to grow at 7.4 percent in the year ending March 31st, 2026, according to the National Statistics Office of the Government of India. And that's above the government's own initial projection of 6.3 to 6.8 percent and more on that shortly.
The markets, however, continue to fall thanks to limited buying support and absence of directional signals on the back of geopolitical and trade tensions, which are, of course, as we've said, continuing well into and quite strongly into 2026. Auto and oil marketing company stocks were amongst the biggest losers at the close. The Sensex was down 102 points to 84,961.
And the NSE Nifty 50 was at 26,140. That's down 37 points. Foreign brokerage views are coming back.
Morgan Stanley, under its base case, according to reports, has set a BSE Sensex target of 95,000, which is about a 13 percent appreciation in the year. That's for December 26th. And on a bull case, Morgan Stanley says about 107,000 for the Sensex.
That's an upside of 25 percent. So take your pick. The broader markets on Wednesday did better.
The Nifty Mid Cap 100 and Nifty Small Cap 100 were up 0.4 and 0.39 percent each. So they were up essentially while the benchmarks were down. Amongst the stocks that were doing well are Indian jewellery retailers, whose stocks jumped after they reported strong sales growth for the December quarter.
And that was, of course, because of strong festive season demand. And remember, gold prices are and have been rising all through this. So Titan stocks climbed close to 5 percent to hit a record high of 4,307 after the company reported a 40 percent jump in sales.
Other gold jewellery companies like Kalyan Jewellers and Senko Gold were up close to 4 percent and 12 percent after their sales update, according to Reuters. Speaking of gold in general, an asset class most fund managers are now asking to actively include in your portfolio for 2026, along with silver, of course, saw prices fall on Wednesday. Spot gold was down 0.8 percent to $4,461 per ounce on Wednesday morning.
And it had touched a one week high earlier in the session. That's again on Wednesday. The record figure for bullion is 4,549. That was on December 26, according to Reuters.
The rupee ended higher for a second consecutive session on Wednesday on likely dollar sales from state run banks. Also, according to Reuters, which put the rupee close at 89 rupees, 88 high for a week after closing at 90 rupees, 16 paise in the previous session.
India GDP 2026
So do we have a sense on how the economy is likely to do in 2026? Well, as a backdrop, the Indian economy grew 6.5 percent in 24-25 and 9.2 percent in 23-24. Dharmakirti Joshi, chief economist of Crisil on the GDP first advance estimates released on Wednesday, said that fiscal 2026 was not growth disruptive after all, or the economy was not disrupted in the way it was expected, particularly following the debilitating tariffs from the U.S. on India's exports to that country. According to the first advance estimates, growth in real GDP this fiscal will be 7.4 percent, as we mentioned a little earlier in the show, which is about 100 basis points higher than anticipated at the start of the year.
Now, that does not hold for nominal GDP growth, which includes inflation and is estimated at 8 percent. That's much shorter than the budgetary assumption of 10.1 percent. The 60 basis point gap between nominal and real GDP this fiscal will be the since 2011-12, says Crisil, which also points out that India's growth momentum has sustained despite elevated global uncertainty due to tariff tensions, riding on accommodative monetary and fiscal policies, robust corporate balance sheets and favourable developments such as above-normal monsoons and low crude oil prices.
Crisil also says fixed investments is the primary driver this fiscal, with growth picking up to 7.8 percent versus 7.1 percent, while private consumption growth has held up at 6 percent above the trend, but a little slower than the previous year. What Crisil is now projecting is that the nominal and real growth will flip, which is that nominal growth will rise to its long-term average of 10.5 to 11 percent, while real growth will be around 6.7 percent. So you can see the inflation gap there.
Private consumption, which accounts for about 60 percent of GDP, is seen growing at about 7 percent year-on-year compared to 7.2 last year, and government spending is expected to rise 5.2 percent year-on-year in 2025-26, up from 2.3 percent last year. Manufacturing, which represents about 13 percent of GDP, is expected to grow 7 percent year-on-year in 2025-26 compared to 4.5 percent last year. Crisil also pointed out that the NSO is set to release a revised GDP series with a new base year of 2022-23 in February, which will replace the current 2011-12 series, which may impact the and growth of GDP due to a more updated base and methodological improvements.
The India Energy Week Segment
Well, global oil prices eased off on Wednesday, even as China called the U.S. a bully after President Donald Trump's administration said it persuaded Venezuela to divert supplies from Beijing and import up to $2 billion worth of embargoed crude. Brent crude is currently around $60.79 or just under $61 a barrel. Trump wants to control Venezuela's vast oil reserves after having attacked Venezuela and extracted its leader Nicolas Maduro, whom it has cast as a drug trafficking dictator in league with Washington's foes, according to Reuters.
Trump said the U.S. would refine and sell up to 50 million barrels of crude stuck in Venezuela under a U.S. blockade in his plan to revive a sector-long decline despite sitting on the world's largest reserves, according to Reuters. Trump said that the oil would be sold at its market price and the money would be controlled by him as President of the United States of America to ensure its use to benefit the people of Venezuela and the United States. The deal could initially require cargoes bound for Venezuela stopped by China to be rerouted as Venezuela seeks to unload millions of barrels stranded in tankers and storage, Reuters added.
Meanwhile, Chinese independent refiners are expected to switch to heavy crude from sources including Iran in coming months to replace Venezuelan shipments halted since the U.S. removed Maduro, according to analysts and traders who spoke to Reuters. I reached out to Vandana Hari, Energy Markets Analyst and founder of Vanda Insights based out of Singapore, and I began by asking her how she was seeing Trump's move to move oil from Venezuela to the United States.
INTERVIEW TRANSCRIPT
Vandana Hari: This announcement by Trump that you are referring to definitely has impact, short-term impact, on the market. It has longer-term implications for the market as well. So, in terms of the short-term impact, it is very relevant because what it signals is that now there is a pretty immediately available path for Venezuela and the state-owned company PDVSA to manage the overflowing crude storage, which had forced a cutback in production.
So, we know that through December the U.S. had been imposing embargoes and all sorts of restrictions on tankers coming into and going out of Venezuela, which had created quite a lot of logjam because, well, PDVSA first stored the crude onshore, then it stored it in tankers, ultimately ran out of space, and was finally forced to ask joint venture partners to curtail output. Now, while on the global scale and in the global scheme of things, that didn't really matter much because we are in oversupplied markets, and this was pretty much happening at the margin because we were talking about perhaps 300,000 to 400,000 barrels per day, around a third of Venezuelan oil output being lost. So, in the very immediate term, this is actually good news for Venezuela, for sure.
Very good news for U.S. Gulf Coast refiners because I am assuming they will get access to most, if not all, of this crude. Of course, Trump hasn't spelled out the details on who will actually consume that crude, but the assumption right now is that 30 to 50 million barrels will all end up in the U.S. Gulf Coast, where, as we know, we have refineries which have been built, designed to process exactly this kind of crude. It's good news for them.
It puts pressure, downward pressure, on comparative, rival Canadian crudes, which of course also still get consumed, will get consumed in the U.S., but perhaps there will be a little bit less need for Canadian crude. So, that drives down the price of Canadian crudes for the U.S. refiners as well. And of course, as I mentioned, there are longer term implications, which probably we should be talking about as well.
Govindraj Ethiraj: Okay, and I'll come to that. So, when we say 30 to 50 million barrels a day, how long could this potentially last or how long would it take to get absorbed by the refiners?
Vandana Hari: Yes. So, the U.S. Gulf Coast is the beating heart of the American refining industry. It has close to, I think, half of U.S. refining capacity, if not more, is concentrated there. So, they could use up that 50 million barrels. Of course, they will not be consuming entirely that crude. It will have to be blended with other kinds of crudes, but I would say perhaps in a month or so, they could easily consume that amount of crude.
Govindraj Ethiraj: If we were to now look at how 2026 is shaping up, minus all of this, what's things looking like, including the fact that Saudi Arabia has stepped up some of its output?
Vandana Hari: Yes. So, obviously, Venezuela has stormed to the centre stage because of the U.S. actions over the past weekend. But if we take the bigger picture, we are entering a year carrying over quite a bit of oversupply and surplus crude from the second half of last year, which is expected to extend through this year.
Now, one tweak on that front, the supply front that OPEC Plus has made is that the group of eight members that had been rolling off their production cuts have decided to take a pause in the first quarter of this year. Now, they have about 1.24 million barrels per day of cuts still left to be unwound. And my guess is that they will probably start to bring that oil back into the market gradually from April, unless, of course, we see a massive collapse in prices through the first quarter of this year.
So, that's on the supply side. On the demand side, I think things are less clear. We do know that, in general, global economy has been slowing down.
It slowed down in 2025 versus 2024 and is expected to further slow down a little bit in 2026. Now, as a corollary, almost, the expectation then is that oil demand will also slow down. It will continue to grow, but the growth is decelerating.
That is the big picture with which we are entering 2026. I think OPEC Plus and specifically the group of eight members have pretty much, I would say, run out of bandwidth or patience to continue their cuts, or let alone to cut any deeper. So, if there is excess supply, unless prices drop to such an extent that they become extremely painful for the U.S. shale sector and we see a major attrition there, we are probably going to see an environment of moderate oversupply, which means lower prices compared with last year.
Govindraj Ethiraj: Right. So, the last year saw prices falling more than 15 percent. And would you say that we'll then, or likely to be then, in the $60 range per barrel?
Vandana Hari: Yeah. So, look, we are entering a period, or we are in a period of grave geopolitical uncertainty. And I think the events of the past few days have really driven home that, in case we had forgotten that over the year-end break.
So, it's really hard to say what are the unknown unknowns in the market right now. But based on what we can see, I'm not that bearish in the sense I'm not calling for Brent into the 50s, or I even see some forecasts of 40s. I expect prices to certainly drop from last year, maybe by $6, $7, $8 on average, which then puts my expectations for this year, for Brent average to be in the very low 60s.
Govindraj Ethiraj: Madana, last question. Does this mean that all the oil that Venezuela produces or pumps out, to the extent that it is right now, could go to the US? And if so, what happens then to the other countries that have sourcing agreements with Venezuela?
Vandana Hari: So, the longer-term implications of all the changes that are happening on the political level in Venezuela are actually quite interesting for the market. Now, for the past several years, as the US has imposed sanctions on Venezuelan oil, most of the barrels have been flowing at a very discounted rate to China. Within China, they have typically been consumed by the small independent refiners or the so-called teapots, which, of course, depend on heavily discounted crude from Venezuela and places like Russia and Iran as well.
The big question here for the market is that, yes, the US will probably use the 30 to 50 million barrels per day that will move from the Venezuelan storage into the US now. But could the US administration in the interim, and potentially under some sort of agreement with the new government in Caracas, have some sort of an arrangement that all of Venezuelan crude has to be sold into the US? I mean, that's not unthinkable.
We do know that the US Gulf Coast refiners quite like that crude. They also have the freight advantage coming from a nearby country, in which case some sort of rerouting of crude will have to happen here. So China loses access to Venezuelan crude.
Some of the other countries in Asia, including India at one point, also used to take some Venezuelan crude, also potentially does not get any access again to Venezuelan crude. But then China then has to replace that possibly with more Canadian crude. So we're going to have sort of these further rerouting, rewiring of global oil supply, probably not at the scale that we saw after the Ukraine invasion and the Western embargoes on Russia, but nonetheless, some sort of a rejigging of these supplies.
Govindraj Ethiraj: Right. Vandana, pleasure speaking to you as always. Thank you so much for joining me.
Vandana Hari: Thank you.
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Meanwhile, a report in CNBC says that state-owned firms like Indian Oil Corporation and BPCL have continued to buy Russian crude for future delivery through non-sanctioned suppliers and quoted data from tanker-tracker firm Kepler.
The report also pointed out that while India's overall demand for Russian crude fell in December, analysts said the decline was driven largely by reduced buying from Reliance Industries which had been a major importer before the U.S. sanctioned Lukoil and Rosneft in late November. However, state-owned refiners have offset that drop for Russian oil.
Real Estate Trends
Real Estate consulting firm Knight Frank in its flagship report, India Real Estate has pointed out that in 2025, residential sales across India's top eight cities were down 1% to approximately 348,000 units and maintaining momentum at levels seen in the previous year. New launches also fell by about 3% to 362,000 units across the top markets.
Mumbai made up about 29% of all sales at about 97,000 in 2025 and grew about 1%. The national capital region that includes Delhi saw a decline in sales of 9% and new launches also declined 16%. Now, what does this mean in terms of the overall trends and health of the real estate market? And that's a question we will answer in a moment.
Elsewhere, India's office markets did much better ending 2025 with a record-breaking performance and annual gross rising to 86.4 million square feet, up 20% year-on-year and crossing the previous peak of 2024. India's office market, by the way, is amongst the world's most vibrant right now, among other reasons for this being the fact that offices are not being occupied at the same intensity as they were pre-COVID in some of the more developed markets. Bangalore is the largest office market, crossing about 28 million square feet, a historic best, says Knight Frank.
And in the overall sense, and a figure that we've referred to earlier in the week as well, global capability centres or GCCs, which are captives for mostly large multinationals, drove demand, commanding about 38% of total absorption. To get a sense on the granular numbers and more importantly, the outlook for both residential and commercial for the year ahead, I spoke with Gulam Zia, Senior Executive Director Research for Knight Frank, and I began by asking him why residential numbers had slowed down in 2025.
INTERVIEW TRANSCRIPT
Gulam Zia: So, to start with, the report is, first of all, trying to convey one message, loudly, loud and clear. While there are a lot of other noises around, talking about how real estate sector or residential sector has started sliding, the numbers are yet not making that sense. Because, if you're talking about, as far as sales are concerned, just about 1% of reduction in sales compared to last year, and on the other side, when new launches are also shrinking more than the shrinkage in sales, then it's studying something else.
The new launches have shrunk by 3 odd percent. So, net-net, the health of the industry is still very much in the same zone. Simply saying that, the time taken to absorb this entire inventory that's existing in the market is not even 2 years.
So, that's a very healthy sign as far as development of the supply side is concerned. Well, it may not be the same for the buyer's side, but at least as far as the industry is concerned, it is still in the safe zone.
Govindraj Ethiraj: So, what you're saying is that if there are about half a million unsold housing units, that will take about 2 years to get absorbed, if at current rate?
Gulam Zia: Less than 2, it's about 6 to 7 odd quarters is what our estimates tell us. If we look at last 10 quarters rolling averages to project what the future sales velocity would be. So, when we take all that into consideration, we find that in not more than 6 quarters, it will all be sold, which is about a year and a half, not even 2.
And what are the kinds of trends that you've seen on the value side? Well, in terms of rates, the property prices are inching up. It continues to go up.
In fact, in a few places, it's actually a lot increased. Like for example, in NCR, we are watching almost about 19 odd percent of a price rise in just 12 odd months, which is actually crazy if I can use that word. The other markets like say Hyderabad or Bangalore have been going up by 12, 13 odd percent.
So, except for these three markets, the other markets have all seen about single digit growth. Even Mumbai hasn't seen more than 7 to 8 odd percent of growth in prices. So, in value terms, while the prices have moved up a lot, so even if then going back to the numbers that we spoke about earlier, even if about three and a half lakh odd units were sold in a year, the value would be much more than what you would have achieved in the last year compared to last year because your prices have gone up on an average at least about in double digits, about 11, 12 odd percent. And this is in a few markets has actually gone buzzer.
Govindraj Ethiraj: Right. And we've seen several high value transactions in 2025 as well. And is that distorting the numbers or affecting the numbers in any way?
Gulam Zia: I won't be too worried about that, you know, because those numbers are still very, very small. Like if I talk about the entire sales number, this is more than three and a half odd lakh. The number of those high value transaction.
And if I have to qualify, if I'm talking about more than 100 crore apartment as high value, then these are not even 2000, like actually even more than 50 crore would not be more than 3000. So comparatively, it's a very, very small segment. So I would talk about overall value increase and which is what I was hinting at earlier when I'm talking about 19% price rise, that price rise in NCR is not restricted to the high value transactions alone.
Actually, even in Noida, Greater Noida, Faridabad, in fact, it's a very, very democratic kind of price rise when you talk about 20 odd percent of price rise in Delhi. It's not only restricted to the segment of high value transaction. It's pretty much all across mid to low and also have gone up as much.
Govindraj Ethiraj: Right. I'm going to come to commercial as well, because you put out both commercial and residential reports at this time. So when you look at the gains that we've seen in 2025, what is it telling you about 2026?
I mean, will we see similar strength in price rise or have we peaked out and maybe things will edge down a little bit?
Gulam Zia: Residential market is why I earlier told you that there are a lot of noises around. I would also tend to be a little worried, you know, because if I keep in mind that real estate is a cyclical industry and typically this cycle is about 10 to 12 odd years, we have already seen five years of a nonstop, you know, kind of a marathon run towards the peak. So today, if this year is a stability year, like we have seen almost the same number as last year, then I would say this could perhaps be that point where we would have reached that 12 o'clock position on the property clock, which means that the following year may not be as good as what we are already observing.
And that's when all those noises I hinted at, what I spoke about earlier, could actually be coming true in the next couple of quarters. But let's keep our fingers crossed and see what 2026 has in store for all of us.
Govindraj Ethiraj: Got it. Okay, let me come to commercial. Now, the figures that you've put out is a 9% rise in completions and a 20% rise in transactions.
Now, translate for us what that means in terms of actual business activity on ground.
Gulam Zia: We believe that this has been a bumper year. Office sector or commercial market is breaking all records year after year. So last year was a historic best, almost about 74 odd million square feet of a transaction we have seen all over India and in those top eight odd cities.
This year, that number has gone to almost 87 million square feet of gross absorption, which is, as you said, 20% increase. So that is something which is almost unbelievable. Of course, we've been watching these numbers closely throughout the year.
So it's not so much of a surprise for us. But then when you look at the sheer number, the base itself was so high. Typically at this stage, the base effect would have come in to actually shrink your growth numbers or growth percentages.
But in contrast, this year's 20% growth on last year is telling us a different story altogether, which is simple that while all over the world commercial real estate is actually facing huge amount of headwinds in India, there is no letting down of this segment. You have office absorptions growing. As I said, I gave you the numbers unaffected by any geopolitical concerns or any kind of instabilities across the world.
All that aside, India office story is growing strong.
Govindraj Ethiraj: Okay. I would imagine there are two segments that are driving it. One is, of course, Indian companies who are upgrading or moving into new establishments.
And the second is GCCs, which are at over 35%, at least from other reports that I've seen.
Gulam Zia: Which is true. Global capability centres is the actual backbone, is the reason why we are seeing this unstoppable kind of growth in office space absorption. And that is something which is continuing.
For last three odd years, we've been watching GCCs expanding their base in India. And these are all those insourcing, like about five odd years back, the whole story, or maybe 20 years before that, the whole story was about outsourcing. GCCs have brought in the new winds of insourcing.
And these are very high-end research kind of jobs that are coming to India from all over the world. Organisations after organisations, MNCs after MNCs are actually setting up their own insourcing research facilities. And that's what the GCC story is all about.
So GCC, again, as you said, has been the largest occupier, almost about 40 odd percent of this huge number of 87 odd million that I spoke about. So GCCs have been the biggest reason. On the other side, on the second number, obviously, is the flex offices.
Flex offices are the new trend for last couple of years. And they've been taking huge spaces in India, expanding their base. And of course, as you said, the Indian offices or even the earlier, what the whole idea was about outsourcing or business process, BPOs, etc.
That was the India facing even that while it has shrunk, but it is actually bouncing back. So all those giants of Indian IT industries have also put up a brave front and have actually done better than last year. So net-net, all this, this number 86 million I'm talking about, all four or five engines were blazing and hence we reached this number.
Govindraj Ethiraj: What are rates looking like in terms of, I mean, when you look ahead at 2026, rentals, rental costs, commercial property prices?
Gulam Zia: The growth in rentals have been pretty high, like in residential here also, it has been going in double digits in cities like Bangalore, etc. And the reason of that is simple, you know, in front of this 86 odd million of office space absorption that we spoke about, the new office space is not even 55 million, which is giving us another very alarming situation that going forward, and I want to see that this trend is continuing, the kind of growth in office space continues, but we will have a serious concern because the supply crunch would have a huge impact on the values, which is what you're asking me, whether these rental values will continue to grow. I want to believe on the way the numbers are talking.
Next year, we shall see non-stoppable kind of a rise in rents purely because the supplies are far behind the kind of absorptions that we have been watching.
Govindraj Ethiraj: Last question, we've talked about both residential and commercial, are there any common threads between the two, except of course, that prices are seemingly rising in both cases, but is there anything else that's common?
Gulam Zia: No, the similarities actually end there. As I said, residential is almost about peaking out if next couple of quarters will possibly will tell us a different story. But as far as office is concerned, there is nothing stopping it.
So there is hardly any commonality between the two asset classes. Of course, one that you spoke about or you brought up that the price rise is happening in both sides, but that price rise in residential is already subdued in a few cities like Bangalore, etc. Whereas in Delhi, as I spoke about Delhi, Hyderabad, unstoppable price rise, but that is actually causing a huge concern of unaffordability.
And while right now the prices are looking affordable, but going forward, the situation may change drastically if it continues this way.
Govindraj Ethiraj: Well, as always, a pleasure talking to you. Thank you so much for joining me.
Gulam Zia: Thank you so much. It's a pleasure like always.
