On Episode 818 of The Core Report, financial journalist Govindraj Ethiraj talks to Ashima Tyagi, Economics Associate Director, Pricing & Purchasing at S&P Global Market Intelligence as well as Amit Pabari, Managing Director at CR Forex. We also feature an excerpt from our Weekend Edition conversation with Chintan Haria, Principal Investment Strategist at ICICI Prudential Asset Management Company Limited.

SHOW NOTES

(00:00) Stories of the Day

(00:50) The most severe shock to energy markets since the 1970s

(01:53) Indian markets recover from a fresh round of hammering as oil stabilises

(06:26) Investing strategy in a shifting asset class time

(08:26) Where could the rupee go next ?

(14:13) Analysing demand and supply in India’s steel industry

FULL INTERVIEW with Chintan Haria

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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 Tuesday, the 10th of March and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital.

Our top stories and themes…

The most severe shock to energy markets since the 1970s

Indian markets recovered from a fresh round of hammering as oil prices stabilised,

Where could the rupee go next?

Investing strategy at a time of shifting asset classes

And analysing demand and supply trends in India and global steel industry.

Markets

Last week, we spoke about reliving the 90s when the United States had stormed into the Gulf to liberate Kuwait from Iraq and Saddam Hussein or the Gulf War of 1990-91.

It's now looking like the 1970s, we're told. One week into President Trump's war on Iran, the most severe shock to energy markets since the 1970s is cascading through the world economy, the Wall Street Journal wrote yesterday. To sum up, it's not just that oil cannot be transported out of the Persian Gulf easily since the Strait of Hormuz is effectively closed, but because it cannot be transported, countries like Kuwait and Iraq are running out of storage space and thus turning off the taps.

A JPMorgan Chase analyst told the Wall Street Journal that in the whole written history of the Strait, it has never been closed ever. To her, she says it was not just the worst case scenario, it was an unthinkable scenario. Crude oil, the one data point that matters most right now, has fluctuated wildly on Monday, but was trading at about $104, which is about 13% more as against the day's high of $120 per barrel.

Before we come to the markets, what's India's current thinking on the economic impact of high crude prices in general? The Finance Minister, Nirmala Sitharaman, said on Monday that India does not expect inflation to rise substantially from a jump in global crude prices triggered by the Middle Eastern or the West Asian war, as domestic price levels remain near the lower end of the central bank's tolerance band. Reuters reported her saying, Global oil prices, including India's crude basket, had been falling for a year until the conflicts started in the region, or rather escalated. On the 28th of February, the Finance Minister said in a written reply in Parliament, The Indian basket rose from about $69 a barrel at the end of February to about $80 a barrel by the 2nd of March, according to that reply.

The Reserve Bank's October 2025 monetary policy report had estimated that a 10% increase in crude prices could lift inflation by about 30 basis points, assuming a full pass-through to domestic fuel rates. However, the medium-term impact of the global crude oil price rise on inflation depends on several factors, including exchange rate movements, global demand and supply situation, monetary policy transmission, the state of general inflation, and the extent of the indirect pass-through, according to the Finance Minister. Main state will also see impact, perhaps more, for instance, exporters whose consignments are held up or stranded, and they run into thousands at this point.

So first it was tariffs on US exports, now it is war affecting exports, and presumably imports to and from all over the world. Now the markets, Indian stocks, suffered their worst fall in a month on Monday, closing at nearly one-year lows, thanks to that big spike in crude oil prices, which we were of course anticipating and bracing for. India's benchmark indices have now fallen about 4.6% since the start of the Iran war.

The only saving grace, remember it could have been worse, is that Indian markets seem to be somewhat benign, like many other markets world over, in the face of these fairly cataclysmic events, since this war, with all its economic aftershocks and shocks, can surely be called one. The Nifty 50 was down about 422 points to a 10-month closing low of 24,028, and the Sensex was down 1,352 points to an 11-month low of 77,566. Both indices were down much further on open but picked up later on news of oil supplies being released by G7 countries, which was subsequently confirmed by several media organisations internationally.

Reuters also added that the Nifty 50 had dropped over 10% from its record high of 26,373. Reuters also added that the Nifty 50 had dropped over 10% from its record high of 26,373, which was touched on the 5th of January, so it's two months since, and that marked its entry into the technical correction zone. Broader markets were down two on Monday.

The Nifty mid-cap and small-cap indices were down almost 2% each, or rather 2% and 2.2% specifically. On Wall Street, stock futures fell sharply after U.S. oil topped $100 a barrel, raising concern about stagflationary environments for the U.S. economy of rising inflation and slowing growth, according to CNBC, which also pointed out that the CBOE Volatility Index, Wall Street's fair gauge measuring investors seeking protection in the options market, has topped 30 for the first time since the market's tariff-driven sell-off of last April. Meanwhile, the U.S. government on Monday ordered non-emergency employees to leave Saudi Arabia as the war engulfing Iran widened across the Middle East.

Elsewhere, Iran has ruled out an immediate ceasefire while attacks continued, and an Iranian foreign ministry spokesman said on Monday that the U.S. was after Iranian oil reserves and aimed to weaken and divide Iran, according to comments translated by Reuters. And back home, the rupee fell to a record low on Monday as fears of a prolonged war in the Middle East hit regional currencies and, of course, those rising oil prices. The rupee fell to an all-time low of Rs.

92.34 and then finally closed down at Rs. 92.32, according to Reuters, which added that the Indonesian rupiah and the Filipino peso also hit record lows. By way of backdrop, India is the world's third-largest oil importer.

Meanwhile, gold fell on Monday as the war fuelled inflation concerns, which also dimmed near-term U.S. interest rate cut prospects and boosted the dollar, according to Reuters. So moral of the story here is extreme uncertainty, such as what we are seeing is good for the dollar, mild uncertainty, at least on a relative basis, is better for gold and silver. Spot gold was down about 1.2% at $5,109 per ounce on Monday morning.

Investment Strategies During Shifting Asset Classes

Some quick views here. How does one assess what assets to invest in at times like this? Remember, gold and silver were not on anyone's horizon, or at least non-institutional investors or very specialist investors, but that changed as we entered 2026, when everyone rushed in. And when does one rotate out? I put these questions as part of a longer interview with Chintan Haria, Principal Equity Strategist at ICICI Prudential Mutual Fund, and I also asked him how he would be shaping his portfolio between 2025 and 2026.

INTERVIEW TRANSCRIPT

Chintan Haria: If you look at from a construct of the portfolio, 2025 beginning one could probably easily bet on gold and silver, which most of the people who were listening to the voices that all the gold ETF, silver ETF people were seeing, they would have reached out because there was a deficit for four years and that was probably going to happen and de-dollarization was a player. Today after gold going up 70-80%, silver going up 150% and then obviously having minor crash, they are not as attractive but they still remain a chunk. And let's remember the positioning wise, if you look at the global debt, it's 300 trillion dollars plus.

If you look at global equities, it's 110 trillion dollars plus, 65 trillion dollars is concentrated in US alone. In that context, if I look at the silver market of almost 7-8 trillion dollars and gold market of now 30 trillion dollars, it's not that large. So allocation wise, I think people may still want to have the safety of gold and silver a little bit but from a strategy perspective, if 2025 early beginning was easy in terms of focussing towards metals, hard commodities and gold and silver, 2025 beginning probably has shaken that a bit and it will not be as easy and almost looks like certain it will not be as remunerative also.

So I think strategy wise, 2026 would be a year where you try to protect your capital and then try to hit the sixes as and when you get the opportunities. Maybe these events of a war etc. which probably correct the markets, give us an opportunity.

But right now, trying to protect capital would make sense for most investors because the world is too uncertain.

Rupee

The rupee has hit a fresh low. So where do we stand on currency and commodities in relation at the present juncture? I spoke with Managing Director of CR Forex and I began by asking him how he was seeing the rupee right now in context of other currencies and his outlook here on.

INTERVIEW TRANSCRIPT

Amit Pabari: In last 15 to 18 years, what I observed whenever there is a global crisis, rupee tends to get weaker and the weakness is generally there for some more time. Let me give you a perspective. 2008 subprime crisis, rupee weakened and gradually weakened only.

Then 2013, same story. 2018, same story. Russia-Ukraine war, same story.

Then now in 2026. So every couple of years we have seen some or other global crisis is coming and rupee generally weakens. Now the question is whether the weakness what we have seen in the past, whether we will see the same kind of weakness at this point of time?

The answer is clearly no. In 2018, we have got weaker by double digit number. Same, 2013-2018, we have got weaker by close to 7-10%.

This time I think the fundamental factors are better so we will not get weaker what we have done in the past but the weakness can persist for some more time. Apart from that, the challenging situation as far as India is concerned, the challenging situation is RBI short position. We are seeing $723 billion FX reserve but foreign currency will be close to $550 billion.

If I remove $61 billion what RBI have sought, so the reserve is at a lower end and technically the entire world is moving into a direction where they all want to buy gold. No one wants to buy dollars. So these are all factors which is going to keep pressure on the dollar-rupee pair.

Govindraj Ethiraj: You talked about dollars and we have seen of course the dollar strengthening further despite us having gone from let's say a trade war to a real war. During the trade war, the gold was gaining and the real war the dollar is gaining. So what does that tell us?

Amit Pabari: There are 2-3 aspects. First, when dollar index moved from 114 to 100 or below 100, at that point of time as you rightly said, at that point of time also we were getting weaker. Other currencies were getting stronger as compared to dollar.

At that point of time, the problem was the short-push note RBI created. During Shaktika and Das period, our short-push in the forward was close to $91-92 billion. Debt is currently at $61 billion.

So whenever the flows were coming in, RBI was buying those, you know, absorbing those flows. Second issue was last year, you know, other Asian countries have got inflows with respect to FIIs but we were not getting flows because of higher valuation. You can say higher valuation or Indian domestic investors were giving an exit to FIIs.

We were pouring money in mutual fund and direct equity. So Indian equity investors were giving exit to FII. So because of these 2 reasons, Rupee was getting weaker last year but now everything is against Rupee.

You know, crude is going up, FIIs are taking money not from India but globally also. You must have read the news of Blackrock. They have clearly mentioned that they are not going to allow more than 5% of the net assets withdrawal.

So FIIs are selling all riskier assets. That is the problem number 2. Third, BXY and 10-year yield is going up.

So this is a classical situation in the past also 2008, 2013, 2018-2022 when global factors are not supporting, then our currency is going to get weaker. And ideally, RBI is following a great strategy. They are not maintaining a level.

They are maintaining a volatility. The volatility is going to increase drastically. They are going to come and intervene.

So that is also a good strategy. They have been doing it well. They situation is tensed, then Asian currencies generally get weaker.

We are also getting weaker.

Govindraj Ethiraj: Last question. So you mentioned Asian currencies. In the last couple of years, we have depreciated more than almost all Asian currencies, at least the prominent Asian currencies.

Are we at a point today, because maybe like I said, we have gone from a trade war to a real war and other uncertainties, that pattern could change?

Amit Pabari: I think on a relative basis, we might not get weaker, what has happened in the past, but weakness will still persist.

Govindraj Ethiraj: Right. And I know this is an uncertain time to take a call of any sort. But how are you seeing the next few weeks or months?

Amit Pabari: You know, we are entering into a phase in the world where the unipolar world is entering into a multipolar world. Earlier US was dominating the entire world. I think we have entered into a zone where multipolarity will come into a picture.

And historically, last World War I, World War II, you know, whenever it has happened, it has started in a small phase and it has prolonged for a longer period of time. So my idea is that even if US Iran war gets stopped, we will see some thing or other happening. And in Trump era, volatility is going to be there.

So not expecting a much reversal in tension or volatility in near term, expecting something or other thing will happen in next couple of years.

Govindraj Ethiraj: Got it. Amit, thank you so much for joining me.

Amit Pabari: Pleasure is mine.

Steel Trends

India's crude steel production increased about 11% year-on-year to 153 million tonnes in the first 11 months of the financial year, Reuters reported, adding that finished steel consumption rose 7.2% to 147 million metric tonnes during the same period.

Finished steel exports, rose about 36% to 6 million metric tonnes in the first 11 months of the financial year. Reuters said this was provisional government data. India is the world's second biggest crude steel producer and also imported about 5.5 million tonnes of finished steel during April to February, which is down 37%.

So how do industries like steel stack up right now, given the dependence on some gas for production? And what are the overall steel trends, including in the region? I reached out to Ashima Tyagi, Economics Associate Director at S&P Global Market Intelligence, based out of Singapore, and who specialises in metals and mining. And I began by asking her, what was she picking up in terms of the latest trends?

INTERVIEW TRANSCRIPT

Ashima Tyagi: But on the Indian steel markets, there are definitely going to be repercussions. It would not be something that will not affect the steel industry at all, because a portion of the Indian steel industry is also gas-based. Of course, not to a large extent, but maybe 5% of steelmaking in India.

But yeah, I think if you take a step back and look at Indian steel market generally, so they were actually on a free fall from May last year to almost early December last year.

They actually dropped like 17% during those seven months and prices hit a rock bottom of, say, US$500 per metric tonne in early December. After which, again, the next two months were very interesting because it almost recovered all of that fall in those two months. So from, I think, early December to early February, prices had again risen 16% and they were trading at almost US$600 per metric tonne.

Now, what drove that increase is what people are interested in, like what changed. So of course, the variety of factors. I think number one was input prices rose.

So we had coking coal prices really jumping 23% during that same period. And India imports 90% of its coking coal and prices were really shooting through the roof. So the steelmakers had to pass on that increase to the consumers.

Then of course, there was this restocking activity that is typical during the Jan to March quarter. So you have companies restocking during this period. And typically, we've seen demand is healthy.

So that also helped. And then there was this aspect of the safeguard duty coming in end of December. So there was a provisional safeguard duty in April last year and which expired early November.

And end of December, it was reinstated. So this safeguard duty of, say, 12% will really cushion Indian steel prices going forward, not to a big extent, but certainly it really supports domestic steel industry. So I would say these three factors really helped.

Plus, from the export front, you also had a lot of exports to EU initially in form of front loading before CBAM kicked in early Jan. And then also to non-EU destinations. So overall, it looked good.

Domestic was doing well and exports were doing well. So we really saw that increase. But I would say last week itself, we're already seeing a little bit of softening.

So prices have again dropped to, say, $587. And our forecast for this year is that prices will not be as high as they were in, say, December last year of $600. They will tread in, you know, $550 to, say, $580 this entire year, with Q2 and Q3 also being very, very muted.

So not as strong as we saw things to be last two months.

Govindraj Ethiraj: Right. A couple of questions. So one is, you talked about coking coal prices having gone up, and that in turn has increased input prices for Indian manufacturers.

And you also said we import 90% of our requirements, that's in India. What are the dynamics there? And how much of Indian steel industry is driven by coking coal?

Or are the manufacturers driven by coking coal?

Ashima Tyagi: So I mean, coking coal, because it's imported from Australia, it really adds to the cost of Indian steelmaking. So collectively, it's said that iron ore and coking coal is almost 60% of the cost of steelmaking in India. And what had in Australia is that there was cyclone season early January, and that led to flooding in the mines and really tightened the supply in January.

Of course, things have eased out a bit now, early March, but I think January, February prices were extremely, extremely high. And because India is heavily dependent on importing from Australia, there is no other alternative. There's no other way to diversify your import, so to speak, because the quality of coking coal that you get from Australia, you don't get it from other parts of the world.

So that is a big factor. And even in the context of the Middle East crisis, for example, miners are already talking about higher costs, because, you know, mining is an energy intensive process. So if crude goes up, that mining costs goes up.

And there is a sense that perhaps coking coal mining costs will also go up. And therefore, India will be, you know, dependent on importing high price coking coal. At the time when I think Indian rupee is also weakening.

So when your currency is depreciating, your exports become competitive, but imports become even more dearer. So coking coal prices could actually be higher for Indian steelmakers, and that in turn could really increase the cost of steelmaking. And at the same time, exports to the Middle East could be hurt, because Indian steelmakers export either to say Southeast Asia, places like Vietnam, or they export to the GCC countries, or to Europe.

And now what has happened is that because of CBAM coming in, exports to Europe will be becoming challenging as well. And now with Middle East blocked, exports to Middle East will also be hurt, at least in the short term. And then the only outlet for Indian steelmakers to export is, say, Southeast Asia.

But I think our company's base case scenario for the Strait of Hormuz to open up is three to five weeks at least. And this is based on our assessment from the risk team of, you know, how much ammunition Iran might have and how much defence capability it has to really control the Strait for a longer period.

Govindraj Ethiraj: Right. Tell us a little bit about Chinese exports and including into India or China and Vietnam exports. And how are you seeing that play out in the next few months?

Ashima Tyagi: So I think there is an excess supply in China. As we all know, I think that's something that's been plaguing the global steel industry for a long time. But as I said, the trade actions that were taken last year in India, and it's not just the safeguard duty, there were anti-dumping duties against HRC imported from Vietnam.

There were a couple of, you know, duties on electrical steel as well. So all of those actions will really protect Indian steel from really low priced steel coming into India. So I think Chinese steel was always never being imported in a big way into India.

But there is potential of Japanese and Korean steel to come into India because, again, Japanese prices are very, very low at this point. They are actually at par with Indian domestic prices this quarter because Japan's economy is not doing as strong. And given the fact that we have a free trade agreement with Japan and Korea, there is a likelihood that imports could come in from those countries rather than, say, mainland China.

Govindraj Ethiraj: What's your outlook for Indian demand, roughly first half of calendar this year?

Ashima Tyagi: The last quarter of the financial year, which is Jan to March and first quarter of the calendar year is typically strong, as I mentioned, but we expect softening to happen in Q2. And of course, it's got to do with the prices as well, because if crude prices really jump, we know the impact on India. So on commodities, the impact is seen from the point of view of currencies as well.

It's taken from the point of view of inflation rising or GDP growth slowing down or what the RBI would do with the rates, etc. So it will have effect from the macro point of view a lot more. So we do think that demand would slow down.

And it typically does, we've seen in Q2, you know, after a solid Q1 of the calendar year, it typically slows down. But it remains to be seen, you know, how long this crisis will extend and how much inventory India has to protect itself in the meantime.

Govindraj Ethiraj: Ashima, it's been a pleasure. Thank you so much for joining me.

Ashima Tyagi: Thank you, Govind.