Markets Jump In Best Session In Over A Month
Early signs were spotted of tensions between the US and Iran being resolved
On Episode 815 of The Core Report, financial journalist Govindraj Ethiraj talks to C S Vigneshwar, President at FADA as well as Sehul Bhatt, Director at CRISIL Limited.
SHOW NOTES
(00:00) Stories of the Day
(01:09) Markets jump in best session in over a month
(05:24) Why India has to brace for a gas shock.
(12:17) India imported $98.7bn worth of goods from West Asia in 2025, making the region a critical supplier of energy, fertilisers and industrial inputs.
(14:05) Airlines including Air India are adding long haul capacity to ease backlogs.
(15:44) Why February was a bumper month with 25% growth for Indian car makers.
(23:23) Indians account for more than 20% of Dubai property purchases by foreigners.
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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 Friday the 6th of March and this is Govindraj Ethiraj broadcasting and streaming weekdays from a very warm Mumbai, India's financial capital.
Our top stories and themes…
The stock market has jumped in the best session in over a month.
Why India has to brace for a gas shock.
Airlines, including Air India, are adding long haul capacity to ease backlogs but at huge prices.
Why February was a bumper month with 25% growth for Indian car makers.
India imported something like $99 billion worth of goods from West Asia in 2025, highlighting the proximity and criticality of India and West Asia trade.
Indians account for more than 20% of Dubai property purchases by foreigners.
Markets
India's benchmark indices posted their best session in over a month as early signs were spotted of tensions between the US and Iran being resolved. The big question, of course, is when the war in the Gulf could end and there are varying opinions.
The US is stressing that the military action will be over in a matter of weeks and will not turn into a so-called forever war. But experts told CNBC the US could easily get bogged down in Operation Epic Fury if the Iranian regime proves more resilient than expected. All of this has implications for India and particularly countries in this region.
India is the world's third biggest oil importer and relies on the Middle East or West Asia for about 40% of its oil imports and almost 90% of LNG, LPG imports and more data points in a bit. Meanwhile, while all of this has not affected the stock market so much, there are, however, mounting challenges on the energy front. Mangalore Refineries and Petrochemicals, or MRPL, has shut a crude unit and some secondary units at its 300,000-barrel-per-day refinery because of oil shortages, according to a Reuters report on Thursday evening, which added that Asian refiners are struggling to secure prompt replacement crude cargos as Iranian threats to shipping through the states of Hormuz have disrupted crude oil flows.
MRPL specifically represents about 6% of India's refining capacity. The state of Hormuz, as we've been pointing out, is a conduit for about 20% of crude oil consumed globally and some Chinese refiners have apparently already started to cut runs and more on that in a moment as well. India is also believed to be talking to Russian vessels with oil on board floating off India's coast to make up for the loss of Middle Eastern crude, again reported by Reuters, which added that India's crude stocks cover only about 25 days of demand.
We, of course, all remember that following threats from the United States and as a precursor to a tariff deal, India had cut back on Russian oil purchases from January. Oil prices, meanwhile, rose on Thursday as supplies and shipping continued to be disrupted. Brent crude was up about $1.7 at $83.12 per barrel on Thursday morning.
Some producers have cut output and China's crude carriers have now accompanying naval escort ships. India may also seek U.S. marine cover, according to some reports. The U.S. has promised naval cover for ships sailing through the Persian Gulf, but it's not clear whether everyone's ships would be covered.
The Chinese government has told the largest oil refiners in China to suspend exports of diesel and gasoline, a Reuters quoted analyst saying. Now, India too exports a fair amount of diesel and gasoline, particularly from its West Coast refineries and by companies like Reliance. Could India also do something similar, which is to stop exports of diesel and gasoline, particularly from some of the West Coast refineries? Well, we don't know at this point, but I'm pretty sure it's being discussed or is being discussed.
Elsewhere, Iran's foreign minister said the country is ready to abandon its nuclear programme if the U.S. presents a satisfactory alternative offer, once again, according to reports. Now, all of this did or did not have a strong impact on the markets, which of course had a good day with the Nifty 50 ending about 285 points up at 24,765 and the Sensex ending almost 900 points higher at 80,015, so back over the 80,000 mark. The Nifty mid-cap and small-cap indices were up 1.5 and 1.58%. The rupee also had a good day, posting its biggest one-day gain in a month on Thursday, Reuters reported, adding that the Reserve Bank of India is believed to have stepped in and bought aggressively.
The rupee touched a peak of Rs. 91.41 and closed finally at Rs. 91.60. Gold prices were up on Thursday with spot gold up 0.4% at about $5,156.
Remember that gold is still short of its record, that's $5,594 in January. So while prices of gold are high, they're not shooting through the roof, at least as they did before this attack happened.
LNG Squeeze
A concern obviously is gas, as we've touched upon already. A note from Sourav Mitra of Grand Thornton Bharat says, gas supply poses a more critical concern than crude oil as in terms of petroleum product shortage, India is comfortably placed having a buffer against short-term crude supply distortions. Natural gas has significantly lower storage days, making it more vulnerable to prolonged supply disruptions.
The note says, adding the fertiliser sector is highly dependent, that's more than 80% in recent years on imported gas, while uninterrupted supply is essential for food security followed by the city gas distribution or CGD segment, more than 35% in recent years. Qatar, as we reported yesterday, has halted production and declared force majeure after recent attacks and restarting production in any of these centres will take several weeks. I reached out to Sehul Bhatt, director at CRISIL Intelligence, who put out a note on LNG movements yesterday, which we also reported and I began by asking him how he was assessing the present situation.
INTERVIEW TRANSCRIPT
Sehul Bhatt: It's a clear uncertain times and we have not seen such a kind of uncertainty in the recent past. Two, three variables which are very prominent as far as this entire development is concerned. One, to what extent this severity or the conflict will continue and two, how will that impact not just the root or the choke point but also the supply or the production side.
And hence it puts certain questions and hence risk for not just country but the constituents of corporate India as well. One, how do we look at prices and second, if the severity or the preluminance of conflict continues, it may also lead to a supply or a procurement related risk. First, we are already aware of the elevated prices at which the LNG is quoting in the spot market and obviously that's unsustainable and that needs to be seen to what extent and for how long this conflict continues.
And that is doubled right, the prices? Yeah, that's almost double the kind of free conflict level that we had seen. And the second is the priority between whether it's a root or a production facility that comes up first.
Now the problem in case of gas is much severe compared to crude is because the Qatar's decision yesterday or over the last days of halting the supply and hence not just the procurement through root but also the supply risk here is a much severe condition. That's where I'll start with the initial quote that the severity in case of these two commodities between food and gas, I'll say gas is a really severe commodity.
Govindraj Ethiraj: Right. And how are you seeing India's own LNG demand, particularly for industries like fertilisers and power and beyond that as well? What are the chances of us, that is India finding substitutes in presumably a short period?
Sehul Bhatt: So I think from India's point of view, if you look at gas from an energy mix, it's around six percent but what it backs is the underlying end-user sectors. Our view is that the medium-term growth for the gas convention in India is somewhere around five to seven percent. That's our view on three years CAGR.
The large constituents and the drivers of this growth is one, the CGD segment. We have fertiliser segment. The third one will be the power depending upon the way in which the temperature movement happens.
And then you have refining and the entire pack of rest of the sectors put together. Hence, how will these sectors look at alternate mode of sourcing mix for fuel that needs to be seen? One, the dependency on import as a country will be almost 50 percent and that's where we rely very heavily on the LNG side when it comes to the entire country's gas consumption.
And within this import of 50 percent, the dependency on that route is equivalent. Again, almost half of our import comes through that route and almost 40 percent of our sourcing comes from Qatar. So that's why the scenario is quite severe here.
Alternatives available. Possibility is in case you want to diversify the sources of imports. I think apart from the Middle East countries, US could be one source.
Obviously, that will also have an impact in terms of overall realisation and that the overall transit cost. So that's one way in which you as a country, we look at alternative sources of gas. Second, an immediate solution for some of the industrial or the commercial consumers where we already started seeing impact for the last two, three days, especially the refiners or the kind of INC consumers that were being procuring gas from the CGD network.
For them, the alternate here would be fuel oil or it can be a kind of a mix of LPG related inputs. The problem in such a scenario will be the alternate fuel, which are also linked to hydrocarbon and the value chain of hydrocarbon. They also see an escalation of prices.
So I think, one, the availability is again a risk and at the same time at what price that's available. So I think these two risks will be clearly seen. And the packing order, which we've already started seeing is on the industrial consumers where we have seen updates in the last two days that curtailment of gas has already happened in some of the pockets in Gujarat and Maharashtra.
Govindraj Ethiraj: So one is the availability of gas and the other the price at which it's available. So it does appear that gas may just not be available because so much of it comes from West Asia. But my question is that if we were to hypothetically import from the US, could we at some price be able to find enough for our needs at this point?
Sehul Bhatt: I think in the entire value chain, because of the escalation of risk and the kind of constraint that we'll have on the supply side, the risk premium and the factoring in of this supply and efficiency has come in the entire commodity value chain, be it from US or from a Middle East priced LNG. And hence, I think even if the source and mix change, I think the elevated and typically from a corporate point of view, we look at the YOY or the change in the sourcing pricing. So I think that's going to be an elevated level till we see some moderation in the conflict scenario.
Govindraj Ethiraj: So you're saying that we could source LNG from somewhere else, but the pricing will be so prohibitive that it would not make sense to do so at this point at least?
Sehul Bhatt: At this point of time, because see pre-conflict our view was that if things were normal, and if the industry was to be governed by demand supply dynamics, the range was around $12 per mm BTU. That was our view for FY27 plus or minus $1 based on the dynamics. But I think now if the current scenario continues, there will be an elevation in terms of forecasting that we'll have for FY27.
Obviously, that makes an assumption that things should not continue the way in which they are today for a longer time. And that has to be seen on two factors. One, how fast the choke point gets relaxed.
And second, how fast the recovery or the production from Qatar comes in. So I think these two points would be very critical for us to observe. Once these two things normalise, which in our view will take a couple of days or at least a week's time, and then we will have a realistic view in which the gas prices will move.
Govindraj Ethiraj: Right. Sehul, thank you so much for joining me.
Sehul Bhatt: Thank you.
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Meanwhile, a note from Global Trade Research Initiative, GTRI in Delhi, authored by founder Rajesh Srivastava says, that India's economy is closely tied to West Asian supply chains. If disruptions continue beyond a week, the effects could quickly spread from energy markets to fertiliser supplies, manufacturing inputs, construction materials, and export industries like diamonds, he says, and thus a broader supply shock for the Indian economy. So here are some numbers from GTRI.
India imported about $99 billion worth of goods from West Asia in 2025, making the region a critical supplier of energy fertilisers and industrial inputs. Nearly $70 billion of India's petroleum imports come from West Asia, which obviously means that India is exposed to what happens in the Straits of Hormuz. Nearly half of crude imports are sourced from West Asia and India's crude stocks cover less than 30 days of consumption, according to GTRI, which adds that West Asia supplies almost 68% of India's LNG imports and disruptions, as we know, have already caused allocations to be pulled back or cut down.
Some 47% of India's LPG imports come from West Asia, threatening cooking fuel supplies for households if disruptions continue. India imported some $3.7 billion of fertilisers from the same region, so therefore that could affect farm production and food prices. 41% of India's rough diamond imports come from West Asia again, which obviously exposes the surat-based diamond industry to risk.
More than 30% of India's polyethylene imports come from the Gulf, which affects packaging, plastics, and consumer goods manufacturing companies. And 60% plus of India's limestone, sulphur, and gypsum imports come from West Asia, meaning construction, fertiliser, and chemical industries could face potential shortages. All of this is in a note put together by the Global Trade Research Initiative out of Delhi.
Airline Backlog
Qantas Airways Air India and Malaysia Airlines are adding long-haul flights after the war in West Asia has knocked out carriers in the region, affecting travel plans, and of course causing airfares to shoot up according to a Bloomberg report, which says that Qantas, Australia's flag carrier, has seen a spike in customers travelling via the US to get to their final destinations, and it has deployed a 485-seat Airbus A380, which was initially supposed to fly to Germany for maintenance to be used as a flight from Sydney to London Heathrow on Saturday, it said. Air India, more importantly, is adding several extra flights from March 5th to March 10th, including the three extra flights to Toronto and Frankfurt from New Delhi and another one to Paris, and will look at adding more flights beyond March 11th, it said in a social media post. Now, there have also been several posts about how the fares on these flights are quite impossible, running into several lags for economy seats.
Malaysia Airlines also said it will operate extra flights to London and Paris from March 6th to 8th, that's today, and for the next three days. Meanwhile, more flights are now taking off and landing in airports like Abu Dhabi and Dubai, including from India. As we understand, at least passengers who were originally booked to leave India on the first or onwards for westward destinations on Emirates are being able to do so as of Wednesday, late night, and Thursday.
Emirates said it will continue to gradually build back its flying schedule, subject to airspace availability and other operational requirements being met, and reiterated that customers should only proceed to the airport if they have a confirmed booking.
Auto Sales
And finally, some good news. India's retail vehicle sales have jumped about 26% in February, a rise that links back to last year's goods and services tax, or GST tax cuts, and a pickup in weddings, according to the Federation of Automobile Dealers Associations, or FADA, which has over 15,000 dealer members with over 30,000 outlets across the country.
Passenger vehicle inventory, or the average time a car remains in showrooms, has fallen for the fifth month now to about 27 to 29 days, and a year ago, or close to a year ago, the figure had crossed 80 days. While analysts had projected double-digit growth year-on-year, that's in February, but the extent appears to have surprised everyone. Two-wheeler sales also jumped about 25% from a year ago in February, and over two-thirds of dealers surveyed by FADA expect retail sales to grow in March, thanks to festival-driven demand and fiscal year-end purchases.
Dealers have also flagged supply constraints for some models, which, of course, is quite a reversal from where things were a little while ago. I reached out to FADA President C.S. Vigneshwar, based out of Coimbatore, and I began by asking him what was driving the strong numbers, and also what were the segments within cars or passenger cars that were doing well, and other trends that he was spotting at a time like this.
INTERVIEW TRANSCRIPT
C S Vigneshwar: Yes, the last six months it's been pretty much Dwayne Johnson, The Rock. Every month we've been making some records, so we are happy for that, we're grateful for that. A lot of this is actually coming from the small car, entry-level segment, where even the rural markets are doing well.
When you look at the entry-level segment, we are back to 2019 pricing because of the DSC reduction and also some participation from the OEMs in reducing prices. The market has been well because I think the rains have been good, the harvests have been good. We've also been having good minimum support prices.
So all these things have really helped the rural market, which has been doing well for the last couple of years. It is continuing to do well. And right now we're also seeing the urban market participate because it was a bit of a missing segment, missing market for a few quarters, but they are back.
So literally there are many engines driving this growth and we hope this continues.
Govindraj Ethiraj: Right. And when you say urban has picked up and rural continues to do well, so what is sort of holding back urban or what are the demand factors that are presently playing out on the urban side, from your understanding?
C S Vigneshwar: From our understanding, the urban side has been having headwinds from the point of view that the salaries were not keeping pace with inflation in general. But I don't know what has changed in the middle. Probably the salaries have gone up a little bit.
I don't know, but the urban market is back participating in the two-wheeler and as well as the four-wheeler markets. And we are also seeing that commuters, we are yet to go and see whether it's from the rural or urban segment, but the commuter market for the two-wheelers also has picked up. So you've seen a lot of commuters being sold.
I mean, the data shows that. So it's a good thing, which also means that these commuters are extremely important because they form the base for upgradation in the future into mid-segment and higher-segment cars in bulk.
Govindraj Ethiraj: Right. And what are you seeing in the non-entry-level car segment, Vignesh, I mean, including in the top-end? It's been quite strong.
C S Vigneshwar: The top-end, in terms of premium segments, the German 3 have not been growing as fast as they would like to, probably a digit one or two percentage points, which they are increasing. But at the end of the day, I think there's a lot to be done. And concentrating purely on the German 3 may not be accurate anymore, because there are also a lot of other car manufacturers who are actually giving premium vehicles.
And probably they're not taking into consideration, but when they take that into consideration, perhaps there would be a better growth for the premium segment. A small example would be Toyota sells vehicles at six lakhs and they go up to what, nearly two and a half crores. Probably the higher-end segment of these brands should also be taken into consideration.
If it is so, I'm sure there would be a decent amount of growth, even in the premium segment. The mid-segment is doing well. We are seeing a lot of SUVs being launched there.
The current SUVs are influencing themselves. And the SUVization of the market is ongoing and strong.
Govindraj Ethiraj: Right. So when you say that the premium end of cars, you use the German brands as an example versus, let's say the Toyotas and I guess Hondas, which have a much wider range. You're saying that basically the premium end of Toyotas are doing better than what they did before and that's slowing down the other premium brands?
They're selling in bigger volume.
C S Vigneshwar: So I don't know whether they're slowing it down because of it. Today, the customer has a better choice to choose from. You're also seeing that happen from the Volkswagen group and a lot of these manufacturers are having vehicles above 50 lakhs, which used to be the domain of the G3.
But you also have JLR coming in. We have other models also selling there. Probably the market expanded beyond the German 3 brand and that needs to be considered from the fact also that the customer has more options.
Govindraj Ethiraj: Right. On the cars and models themselves, how are you seeing electric traction in the last few months and whether that's changing in any or are you seeing any changes there or any trends there?
C S Vigneshwar: The electric traction is going on fine. You'll always have a month which is up, one month which is down, which is not too much of something which we need to read out of. But what we need to see is the holistically, this alternative fuel, apart from pure diesel and petrol, this month we saw CNG, LPG go up slightly above a percentage and they ate into the petrol market.
We also saw a slight growth in the diesel market. Over the last quarter, we've seen diesel slowly being replaced by CNG, hybrids, LPG and EVs. We think that this alternative fuel of this four would be taking in more market share as we go in.
We have seen market share increase three or four percentage points compared to last year and this we feel will continue to happen with more hybrids coming in, with more EVs coming in, with more customers wanting CNG and LPG options. The OEMs are here to offer this to the customer. It's for the customer to choose and the customer is choosing alternative fuels in the last few years.
Govindraj Ethiraj: Right. And you're saying that CNG, LPG is growing beyond the rates that we've seen in the past, because it's only companies like Maruti and I guess Hyundai, which are supplying it with their entry-level cars. There's a lot of Toyota also supplied.
C S Vigneshwar: It's all put together. Probably they constitute nearly 50% of the market, which matters the top three. And alternative fuels are offering CNG and LPG.
So this will happen, it's bound to happen and we are looking at this going beyond 40% by end of this year, CNG, LPG, hybrids and EVs.
Govindraj Ethiraj: Right. Last question, Vignesh. In terms of types of cars, SUVization, as you called it, is of course the larger trend, which we have seen for some years now.
Anything else showing up in terms of model preferences or what people are desiring, if not getting?
C S Vigneshwar: The biggest trend is right now, the different type of fuels being available, the kind of artificial intelligence and intelligent cars being rolled out by OEMs because customers demanded. And SUVization is strong. We don't see much of another type of vehicle, which is going to replace these SUVs for the moment.
But however, we are seeing a lot of traction also happen in the hatchback segment. So hatchbacks also have been doing well, especially in the small car segments, which has been revived after GST 2.0. Hatchbacks in the lower end market and the entry-level market rather, the SUVization throughout the market range will happen, will continue to happen. And I don't think we're going to have another trend until this matures and it's going to take some time for this to mature.
Govindraj Ethiraj: Vignesh, thank you so much for joining me.
C S Vigneshwar: Thanks, Govind.
Dubai Real Estate
There is much discussion on Dubai as a real estate destination, given the latest developments, including the fact that bombs fired by Iran have landed in the heart of the city, and not just at U.S. air bases nearby, ostensibly the main target of Iran's retaliation.
Here are some interesting data points according to, and rather put together by, real estate consulting firm, Anirof. The main point, of course, is that Indian nationals are the largest foreign investor group, accounting for more than 20% of all foreign property purchases. In 2025, Dubai saw about $250 billion in real estate transactions, the highest in its history.
It also offers the highest rental yields globally, generally ranging between 6% and 9%. Residential prices in Dubai have risen by about 60% to 75% in the last five years. The 2008 crisis saw a 50% to 60% price drop, but Anirof says the market showed increased resilience during COVID-19, recovering in just 12 to 18 months.
