India Is Now Being Driven By Wall Street, Again
Rising treasury yields continue to weigh on investor sentiment in India
On Episode 588 of The Core Report, financial journalist Govindraj Ethiraj talks to Jaspreet Bindra, Founder at Tech Whisperer Ltd as well as Ashutosh Singh, Managing Director and CEO at Asia Index.
SHOW NOTES
(00:00) Stories of the Day
(01:00) India is now being driven by Wall Street once again
(04:39) Oil prices come down as more supply looms on the horizon
(05:02) The owner of the iconic Sensex is launching more indices. What does that mean?
(13:18) Google announced some hundred new AI apps on Wednesday. How many will actually matter for companies and individuals?
(22:05) And very warm nights are rising faster than very warm days as India gets hotter, says a CEEW study
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].
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Good morning, it's Friday the 23rd of May and this is Govindraj Ethiraj Headquartered and Broadcasting and Streaming from a rained-out Mumbai, India's financial capital. Our top stories and themes.
India is now being driven by Wall Street once again
Oil prices come down as more supply looms on the horizon
The owner of the iconic Sensex is launching more indices. What does that mean?
Google announced some hundred new AI apps on Wednesday. How many will actually matter for companies and individuals?
And very warm nights are rising faster than very warm days as India gets hotter, says a CEEW study
Markets Take A Dive
Rising treasury yields continue to weigh on investor sentiment in India in a fresh indicator that bond markets would drive overall financial markets, including in India. And India was not alone. Asia was weak on the whole, as was Europe, ahead of that crucial vote in the United States on President Donald Trump's signature tax bill, which narrowly passed the House on Thursday morning.
The bill now heads to the Senate, where groups of Republicans are pressing for extensive change. Lawmakers plan to vote on approval by August. The bill includes a $4 trillion increase in the U.S. debt ceiling, which the Treasury Department forecasts would otherwise force a default as soon as August or September, adding urgency to the timeline, according to a Bloomberg report. Now, all of this would add to some $36 trillion of U.S. debt, and concerns over mounting debt and Moody's downgrade of the U.S. credit rating last week pushed longer-dated treasury yields to 18 months high. Here's how the Wall Street Journal described it. What should have been a routine auction for 20-year debt with a face value of $16 billion turned into a mini fiasco amidst soft demand.
The auction produced a yield of 5.014 percent, slightly higher than expected and well above the roughly 4.6 percent benchmark set in a string of recent auctions. The yield on the 30-year bond drifted above 5 percent for the second time this week, and the 10-year note is near 4.6 percent and inching higher. This, the Wall Street Journal says, is not a financial crisis, and most of these jumps in yield remain modest.
However, equity investors took and are taking notice, with major stock indices falling in response to the bond moves and mixed earnings forecasts from retailers. Which brings us to emerging markets in India, because rising treasury yields there make bonds more attractive to foreign investors, leading to capital outflows from here. CNBC reported a sell-off in global bonds is accelerating as Moody's downgrade of U.S. credit rating and President Donald Trump's tax bill has brought to fore investor fiscal concerns globally. A portfolio manager told CNBC that events such as credit trading downgrades or budgets that risk expanding deficits tend to bring fiscal concerns front and centre of investors' minds, forcing them to reprice long-end risks. So, India's Nifty, which rose about 4.2 percent last week, has lost 1.6 percent so far this week. The benchmark indices were down on Thursday, pulled down by broad-based selling after actually staying in the positive for the early part of the trading session.
The BSE Sensex was down 644 points to close at 80,951. The Nifty 50 was down 203 points to 24,609. In the broader basket, the Nifty Mid Cap 100 and the Nifty Small Cap 100 indices were lowered by 0.5 percent and 0.26 percent. Meanwhile, other economic signals are flashing green, or rather they continue to. India's private sector activity accelerated at its fastest pace in over a year in May, thanks to a robust expansion in services. Even as price pressures intensified, a survey on Wednesday showed the HSBC Flash India Composite Purchasing Manager's Index, or PMI, compiled by S&P Global, rose to 61.2 this month from April's 59.7. This was the sharpest rate of increase since April 2024, contrasting with the Reuters poll median forecast for a dip to 59.5. I think the key message is that private sector activity accelerated at its fastest pace in over a year in May. Elsewhere, India's finished steel imports fell about 11 percent year-on-year to about half a million metric tonnes following a decline in shipments from China and Japan.
Now, remember that India had imposed a 12 percent temporary tariff on some steel imports, or a safeguard duty to control a surge in cheap imports, mostly from China. Oil prices have dropped by more than 1 percent on Thursday after a report that the Organisation of Petroleum Exporting Countries Plus is discussing a production increase for July, once again pushing up concerns that global supply could exceed demand growth. Brent futures were down to about $63.83, or just under $64 on Thursday.
New Indices On The Way
Asia Index Pvt Ltd., a wholly-owned subsidiary of the Bombay Stock Exchange and owner of the iconic BSE Sensex, or the Bombay Stock Exchange 30 Stock Sensex, has launched four new BSE factor indices. These indices have a base value of 1,000, and the first value date is 20th June, 2005. The Asia Index says their constituents are additionally screened for their liquidity profile and are capped at 4 percent.
And the growth of India's factor investing is helping bridge the gap with global markets and meets the demand from sophisticated investors looking for factor-based investing approaches, according to the Asia Index. So what is factor investing? Well, factor investing is an investment approach that involves targeting specific drivers of return across asset classes.
Investing in factors can help improve portfolio outcomes, reduce volatility, and enhance diversification. Asia Index has launched several indices in the last few months, including the Enhanced Value 50, the Low Volatility 50, and the Momentum 50. So I guess you can guess where it's going.
I spoke with Ashutosh Singh, the CEO of Asia Index, who also sits at the BSE headquarters in Dalal Street, and began by asking him a more fundamental question. What role do these indices play, and what determines the addition of these new indexes or indices?
INTERVIEW TRANSCRIPT
Ashutosh Singh: In general, indices play a very foundational and multifaceted role when it comes to the capital markets. Simply said, and that's what is mostly understood when you speak about indices such as the Sensex or the BSE 100 or any such, they are barometers of the overall health of the market and also the economy. And you could also think of them in a narrower sense as sentiment sensors.
For example, if you want to track the performance of an IT sector, pharma sector, so on and so forth, some teams. So they also become sentiment sensors in a narrow sense. Other use cases would be, a very popular use case would be using them as reference and comparison points to evaluate, let's say, the performance of mutual fund schemes, PMS strategies, so on and so forth.
And off late, we are also seeing another use case which is gaining more traction. That is, they are serving as huge enablers for asset schemes, which allow customers to get all the advantages of low costs in fund management, transparency, market beta exposure, basically getting market matching performances. As some of these indices also underlie contracts in the derivative segment, they also serve as very effective portfolio hedges in that sense, especially when they are underlying contracts in the derivative segment.
So if I were to just sum it up, I would think that indices could mean multiple things, multiple useful things to multiple people in the capital market space.
Govindraj Ethiraj: Right. Before I come to your four indices, you've been also launching other indices this year. You've launched a Dividend Leaders 50 index, a BSE India 150, BSE 1000, and you've got four more now.
So how are these indices complementing your primary offering?
Ashutosh Singh: The way we launch indices is basically through a strategy, through a product strategy that is underpinned on two main pillars. One is the voice of the customer. And for us, the customers are the multiple stakeholders in the capital market space.
So we carry out extensive dialogues with the folks in the mutual fund industry, PMS industry, insurance, so on and so forth. And depending upon feedback we get, we obviously take the feedback, we flesh out the idea and launch indices. So that's a co-creation process.
We also have another very strong pillar, which is our own internal research team. So there is a lot of inward looking focus there where we try to identify the white spaces. We scan through our existing offerings every now and again, and we try to identify white spaces.
And depending upon the opportunities that we find through this exercise, we also end up launching a lot more indices through that exercise. So if I were to just give you some examples, BSE Sensex Next30, that's the first index that we launched after taking over the operations from S&P. That was clearly from our inward looking exercise, where we clearly felt that while there are enough large cap indices, there's nothing that really captures the stocks from 31 to 60 in the capital market space.
So that is one such index that we launched. BSE 1000 was another index that came to that endeavour. BSE India sector leaders.
So these are some examples of inward looking focus, inward looking approach. And the other is like the voice of the customer, which is also a very important pillar in our product strategy overall.
Govindraj Ethiraj: Right. So in the four that you've launched, one is enhanced value, the second is low volatility, third is momentum, the fourth is quality. Which of these reflect what is happening or what is a, let's say, a customer desire at this point of time in the market?
Ashutosh Singh: Like I said, our product strategy is never meant just for the year-end now. So in fact, when we looked at our offering on the factor side, and factor side as you would have seen in the last five, six years, it's gaining a lot of traction. And it's mostly led by the new generation, the Gen Zs and the millennials coming to the market and taking to these factor indices.
So clearly there was a trend where we saw the AUM link to factor indices growing. And at the same time, we also spoke with the industry participants where we got this feedback that we should complete our product booking. So while we already have these four factors on the large mid cap space, what we've done here is we've expanded the universe from large mid to 500.
And we've done some tweaks in the product offering. For the first time, we have introduced the quarterly reconstitution. So that enables us to capture the factor signals a little swiftly.
Basically, since we've expanded the universe, we've also done some tweaks in terms of the caps that we have for the constituents. So for example, in our large mid cap universe, the cap was 5%. Here, the upper cap for the stocks is 4%.
Since we are also introducing small caps through expanding the universe, we have expanded the buffer zone from 20% to 40% to reduce to basically have the churn within reasonable limits. So these are some of the tweaks that we've introduced to these offerings. And like I said, this is not looking at the year and now this is just part of completing the product booking exercise that we felt that we should be launching these indices on the expanded universe.
Govindraj Ethiraj: Let's say again for these the latest four and maybe working backwards to indices like the dividend leaders 50, who are your biggest customers at this point of time, people who would use this to either benchmark or underwrite and so on.
Ashutosh Singh: The biggest customers for index providers in India continue to be the mutual funds. They obviously hold sway in terms of the active benchmarks in terms of passive strategies that they run on the indexes that we launch. However, increasingly, we've also seen a lot of factor launches from insurance companies.
So that's another segment that holds a lot of potential for us in the time to come. PMS again, a lot of PMS strategies are benchmarked to BSE 500. So we actively engage with the PMS players as well.
And apart from doing the standard indexes, these public indexes, there is some work that we also do on the custom indexes side. So let's say there's an idea that you have in mind and you want to test it out. Any institution that could come to us, we could construct, design, or index them, which would be obviously just meant for them and for a custom use case.
So these are the multiple use cases. But yeah, I mean, the short answer to your question would be mutual funds, PMS, insurance are our main customers at this point. And obviously, like I said, there could be institutions that could come to us for custom index requirements, which we also cater to.
Govindraj Ethiraj: I'm sure people put a lot of pressure on you because they want their stocks to be included in either the 30 or the 100, which is where I'm sure a lot of action is, or maybe even 500. So how do you manage that?
Ashutosh Singh: Honestly, Govind, I think, as an index provider, your methodology is out there in the public domain. It's a very rule based, transparent methodology. Generally, the market participants appreciate that.
And we haven't really, at least in my tenure, we haven't come across a single instance where on any rebalance we've had companies approach us, put any kind of pressure to basically get their stocks included in the index or make sure that's retained when it deserves to go out by simply applying the methodology. So as an index provider, my job that way is fairly simple and straightforward. Rules are out there in the public domain.
We have to strictly abide by the rules that we put out in the public domain. Any deviation from that could obviously put us in a spot of bother. So people understand that.
And which is why I think there's been no such outrageous demand from anyone.
Govindraj Ethiraj: Ashutosh, thank you so much for joining me.
Ashutosh Singh: Thank you, Govind. Thank you so much.
Google's New AI Launches, Where Are They Going?
At its annual developer event, Google IO 2025, it unveiled a range of new products and features powered, of course, by artificial intelligence. There were 100 new announcements in all as per Google. The big task is, of course, search, where most of the moolah comes from, and more on that in a moment.
Users in the US this week will see a new AI mode integrated into Google Search and Chrome, which will allow for chat bot style interactions where users can ask follow up questions and engage in natural language exchanges instead of sifting through a list of links. Well, the announcements also included a host of updates around Gemini, that's the AI tool which is embedded in Google Mail and also range from lifelike 3D video calls with Beam to advanced image and video generation tools like Imogen 4 and VO3. So basically, AI is now powering communication, creativity and everyday tech.
The company also introduced Android XR for smart wearables, a response to MetaSmart glasses, which Meta sells along with Ray-Ban. Amongst the cool stuff, Google officially introduced Beam, a next generation 3D video conferencing system, which is designed to and hopes to replicate the feeling of in-person interactions. I've seen a video or two on YouTube and it is interesting, or at least appears promising.
So all of this is being tuned or getting ready for commercial use in workplaces. Google is also expanding its video communication features with real-time speech translation and this functionality already rolling out to Google Meet is set to come to Beam, allowing for cross-language conversations with live translations that maintain original voice and inflection, which is what Google says. I did see a demo again.
This was a conversation between two people, one in English and Spanish. The person speaking English could be heard in Spanish, rather with Google translating real-time, including with the same voice. There is, of course, some lags and so on, but I guess we have to see how it works when it lands on our desks.
And there is a cost to all of this and the value you would derive if you were to cough up those additional dollars, and it is not cheap by any stretch. I reached out to Jaspreet Brindra, founder of Tech Whisperer and advisor to businesses on AI and earlier Group Chief Digital Officer at the Mahindra Group. And I began by asking him what he had taken away from these Google announcements.
INTERVIEW TRANSCRIPT
Jaspreet Bindra: Two actually very exciting days where three things happened. Microsoft had its Build conference, which has been less noticed, but I think is equally exciting, the kind of stuff, but a very different philosophy. Then obviously Google.
And then just before the day ended, Sam Altman also got into the act with Johnny Ive and launched another I.O., which I think was rather cheeky because, you know, same name. But if we were to focus on Google I.O. conference, you're absolutely right. There were a slew of launches.
I think probably the most number of launches that I've seen in any major conference like this. But there were a couple of big differences in this, you know, at a meta level in this conference versus the rest. First of all, a lot of stuff was actually real.
Many times Google, especially in AI, has had this tendency to announce stuff. But, you know, it takes a while to come. It's still vapourware or slideware.
Right now, a lot of stuff, not all of it is real. And second, I think this is the first time that they have been courageous enough, in a sense, to redefine their core business, which is search. And that is a really, really, really big deal.
So those are the two meta things. In terms of what you asked, I think a lot of stuff is practical and real, as I said, whether it be the AI mode in Google search, whether it be Gemini 2.5 Pro, whether it be the, you know, the new generative AI models like Imagine. And I think what was the standout launch in this IO, was their video model VO3, which, according to reports, is much better than Sora and has set a new benchmark.
Their AI studio developer tools, I think a lot of them were real. The glasses will take some time. Some of the agentic stuff will take some time and is still not practical yet.
But a lot of stuff was real and useful.
Govindraj Ethiraj: If I were to bring you back to the 30,000 feet view, where is this headed as in either from Google's point of view and where it wants to take its consumers or what consumers actually desire versus what they are being offered or proffered?
Jaspreet Bindra: A lot of times in technologies like this, it's difficult to figure out what do consumers actually desire. OK, because if you kind of talked about chat GPT, I mean, if someone had done a market research around chat GPT earlier, I don't think what you know, you would have kind of built to spec in that sense. So the philosophy is different.
You kind of give wondrous stuff, cool stuff, and demand gets built in a sense for that. But again, just to answer your question, I think the fact that search now you will have a tab which is like a chat GPT kind of tab for search or a publicity kind of tab for search is something which has been long overdue. And I think customers will like that so they can have the 10 blue links or, you know, have this new tab.
The glasses, which Meta started, but now Google has taken one step further, they're better actually than where Meta has, is again something which I think could be a potentially a hit with consumers. Finally, the video generation too, though expensive, is something which again should be a hit.
Govindraj Ethiraj: So there is stuff that consumers can wear or actually use. There's stuff that they use as productivity tools, including at work and so on that is searching in mails or using mail Google to create responses and so on. So if you want to look, define the emphasis, I mean, just going by these 100 announcements or announcements of 100 products, where do you think Google's focus seems to be?
Jaspreet Bindra: So I think three things. Keep its leadership in search and keep that there, okay, and not get it eroded by some of the other guys who are kind of chipping away. Hopefully build new business models around it, because, you know, only the ad monetised business model will not work with this kind of value.
That's number one. Number two, which was very interesting, is to use its strengths. Google is by far the strongest player, you know, in this area, it owns the internet.
And the interesting part is therefore personalisation about how to use all the data which you have in Gmail and Android and, you know, multiple Google stuff, things that you actually to personalise experiences, which for you, which the others cannot replicate, this is a huge competitive advantage. And three, and finally, to stretch the envelopes, you know, and retake leadership in some of the products like video, for example, with Veeo, again, using the massive content base that they have already in YouTube, etc. So I think those were the three.
And if I may add a three and a half was to stay in the race on agentic AI, okay, which in my view, some of the others are doing more stuff in AI agents, and who wants to come back and kind of be the leader there.
Govindraj Ethiraj: Right, and cost $250 a month from what I could see for the whole suite. That's phenomenal. As in, I mean, you think there is that kind of appetite and value?
Jaspreet Bindra: Well, it compares with the $200 that OpenAI has, and they have subscribers. I think the $250 is for specialised things. So for example, if you want to make a movie, or you want to make an ad film, an ad film costs several multiples of $250.
You know, it's considered to be hundreds of thousands of dollars. And you can actually, if you want to use that $250 thing to make a half decent ad film, the $250 is certainly worth it. And so I think for those niche needs, it's not for people like you or me.
For those of the $20 version, I think it satisfies what we really want.
Govindraj Ethiraj: From your point of view, what are the one or two areas where you still are looking for some kind of, let's say, tool or product, which is or would fulfil an unfulfilled need?
Jaspreet Bindra: Go back to the agentic part. Okay, there's been a lot of noise. Again, Google, for example, demoed yesterday saying that, look, you can now go and search for properties, a very painful process of buying online is a very painful process even today.
And so I think while they've previewed some of those tools, like, you know, try on a dress before you kind of go out there or, you know, it goes to property sites and an agent which kind of buys, selects the right property for you. I think it's still in its early stage. I would want some of that to happen faster.
Maybe I'm asking for too much. And I would certainly want some of those new form factors like the glasses to come much faster. I think they'll be launched, but they'll be launched in the US in the next few months.
I have no idea by the time they make their way across the oceans to come here. That is something I would want to come fast.
Govindraj Ethiraj: Yes, Jaspreet, it's always a pleasure to speak with you. Thank you so much for joining me.
There Are More Warm Nights Now Than Warm Days
Extreme heat now poses a risk to 57% of India's districts, home to about 76% of the population, according to a new study launched by the Council on Energy, Environment and Water or CEEW. The study has found that the top 10 most heat risk prone states and union territories are Delhi, Andhra Pradesh, Goa, Kerala, Maharashtra, Gujarat, Rajasthan, Karnataka, Tamil Nadu and Uttar Pradesh. CEEW study how extreme heat is impacting India assessing district level heat risk says this is the first of its kind composite heat risk assessment of 734 districts in India using 35 indicators and offers a granular picture of how climate change has reshaped heat hazard trends from 1982 to 2022.
So 417 districts of the 734 fell in the high and very high risk categories while 201 were classified as moderate risk. The remaining 116 low risks are not immune or less exposed. The CEEW study highlights three key trends.
An alarming rise in very warm nights, increasing relative humidity across North India, particularly in the Indo-Gangetic plain and heightened heat exposure in dense urban and economically critical districts such as Delhi, Mumbai, Ahmedabad, Hyderabad, Bhopal and Bhubaneswar. In some rural districts in Maharashtra, Kerala and Uttar Pradesh and Bihar where there are large numbers of agriculture, outdoor workers were also found to fall in the high to very high heat risk category. Coming back to warm nights, according to that study 70 percent of districts have seen more than five additional very warm nights per summer in the past decade that's 2012 to 2022 compared to the climatic baseline of 1982 to 2011.
So warm nights are defined as nights when the temperature stays unusually high or warmer than what used to be about 95 percent of the time in the past. Right here in Mumbai for example in the last decade residents here experienced 15 more very warm nights each summer compared to the previous three decades while Jaipur and Chennai saw increases of seven and four nights. Urban heat islands which of course Bombay exemplifies that trap heat during the day and release it at night are mostly driving this trend.
All of this has serious health implications particularly for elderly, outdoor workers, children and people with existing conditions or pre-existing conditions like hypertension and diabetes in both urban and rural areas.
