Markets Run Up for 6th Consecutive Day
The BSE and NSE benchmark indices rose for the 6h straight trading day on Tuesday thanks to gains in consumer stocks and private bank stocks
On Episode 563 of The Core Report, financial journalist Govindraj Ethiraj talks to Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd as well as Ashok K Bhattacharya, Editorial Director and columnist at Business Standard.
SHOW NOTES
(00:00) Stories of the Day
(01:09) Markets run up for 6th consecutive day
(02:38) Why are Indian markets rising and where could they go?
(13:59) Gold prices touch Rs 100,000 per 10 gm in India, record highs globally
(15:16) Build on Blockchain
(21:12) US Vice Pres meetings in India raises hopes of favourable tariff deal
(24:06) US President Trump is going after the Federal Reserve Chairman for not cutting interest rates. What lessons does this hold for India?
(34:35) And another Chinese battery company promises even longer range for a 5 minute charge, beyond BYD’s claim last month
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 Wednesday the 23rd of April and this is Govindraj Ethiraj headquartered in broadcasting as well as streaming from Mumbai, India's financial capital. Our top stories and themes for the day.
The stock markets run up for the sixth consecutive day as the undertone remains firm.
Gold prices now touch about a hundred thousand rupees per 10 grams in India and record highs globally.
Why are Indian stock markets rising and where could they go from here?
U.S. Vice President J.D. Vance's visit to India raises hopes of favourable tariff deals.
U.S. President Trump is going after the Federal Reserve Chairman for not cutting interest rates. What lessons does this episode hold for India?
And yet another Chinese battery company promises even longer range for a five-minute charge beyond BYD's claim last month.
The Markets Stay Strong
The BSE and NSE benchmark indices rose for the sixth straight trading day on Tuesday thanks to gains in consumer stocks and private bank stocks. Both sectors are being or are seen as being shielded from the tariff wars raging right now. The Reserve Bank of India on Monday asked lenders to assign a lower than proposed buffer rate of two and a half percent on digitally linked deposits and reduced the runoff factor as it's called on wholesale deposits into banks from non-financial entities.
According to one estimate quoted on Reuters, these measures could boost the bank's net interest margin between one to 18 basis points and add about one to four percent to net profit. All of this obviously helped financial stocks. The markets overall swung a little but continue to rise on what seems to be a consistent and strong undercurrent or base keeping the market stable when not pushing it higher.
The Sensex closed with a gain of 187 points at 79,596. So we're close to 80,000 and the Sensex has now risen about 7.8% or close to 8% or 5,749 points in just the last six straight trading sessions. The Nifty was up 42 points at 24,167.
The Nifty is now enjoying its 29th anniversary on Tuesday and has rallied about 8% similarly in the last six days. The broad markets also did well with both the BSE mid cap and the small cap indices rising close to 1% just under 1% on Tuesday. Among others, the Realty Index also did well.
So what's been driving the market? I reached out to Siddhartha Kemkha, Senior Group Vice President, Head of Research Retail at Motilal Oswal Financial Services and I began by asking him what was powering the markets right now and his outlook for the coming weeks and months.
INTERVIEW TRANSCRIPT
Siddhartha Khemka: Even if you extend to the last two weeks, the Nifty has moved up almost 11% from the lows. The lows were made after China put a tax on the US post the Trump tariffs were announced in a fear of a global trade war. What we see is three, four factors which have helped India.
First of all, the big overhang of the Trump tariff that event got over. So a relief sign was there that whatever had to come has come. And even in that India figured comparatively at a, you can say better position compared to some of the other emerging markets or the competing countries in the sense that India's tax was lower.
So the Indian government's approach to this Trump tariff was more of an engagement rather than confronting what China or some other regions like Europe did, which kind of now becomes for the, come the nerves for the Indian investors given that they cannot fight the US in this war. And we saw that China doing that the reciprocal tariffs have gone up to as high as 245% for China, which is kind of unthinkable. Nobody does trade at those kinds of rates, but nonetheless, that kind of led to better than comparative in a global market scenario for India.
What also helped is that a lot of short positions were there in the market, in the index, which started covering up. Result season started with the bank. So you saw heavyweight banking companies came out with very strong numbers, right from ICICI, HDFC, the business updates came in, which was pretty strong.
And finally, the FIs started buying in the cash market as well. So we saw that it also kind of supported the market. So all these put together, I think there was a good buying interest that came in at lower levels in the index, India being comparatively better off.
The macro numbers for India that came in at much better, say for example, the inflation number has been, retail inflation has been cooling off consistently. And on top of this, we have the central bank RBI consistently injecting liquidity into the system, having cut the interest rate twice by 25 basis points each. So all these kind of provided the much needed relief for the Indian investors.
Govindraj Ethiraj: We've now erased the losses that we had incurred since April 2nd, which was the famous Liberation Day statement from the Rose Garden in the White House. So my question now is, if we are in some ways back to where we were before April 2nd, then the problems of pre-April 2nd also apply, which were to do with, let's say, corporate results, slowing economy and so on. So how is the market now viewing these two situations or how is it balancing things out?
Siddhartha Khemka: Yeah, Govind, so I think the biggest question that investors need to ask, especially from an equity market perspective, is the earnings, corporate earnings growth trajectory, and which has been a major concern for FY25, because for three quarters consistently, we have grown at a mid-single digit. And even for Q4, the expectation is not that great. Now, having said that, the expectation is that corporate earnings growth will bottom out in Q4 and we'll start seeing recovery improvement in the growth going forward, I think from Q2 onwards.
Some of the factors that will help, A, the government budget presented in the first of March was more, so the government pivoted from a Capex theme to a consumption theme. What we generally see is that the Capex spending generally helps the economy in the long term, because you give out orders, you spend on them, the capacity is created, be it roads, bridges, some other ports, factories. So the earnings growth will come to three years end.
But when you are focussing on consumption, the effect is immediate the same year. So we see that consumption effect coming into the demand for consumer consumption space, improving in this year itself. So we expect from Q2 onwards that to pick up.
IMB has come out with the monsoon update, so which is expected to be above normal. That is also supportive, given that rural farm income has been sluggish for the last two years, three years, and that should add to the overall consumption theme and improve the demand scenario. The other factor is that because of this global tariff thing and economic slowdown, the fear of economic slowdown, crude oil prices have fallen sharply below $60 per barrel, which is also key raw material for a lot of industries.
So again, giving the comfort in terms of margins and in a slower economic growth environment or a lower demand environment, lower raw material prices always helps to push even if companies are taking a price cut to push demand and improve the earnings profitability.
Govindraj Ethiraj: Right. So you talked about banks and let me pick HDFC and ICICI, both of which have seen record prices being hit. Now, my question is, the positive sign, I guess, from a market's point of view is that these banks are doing well, they're raising more deposits, their margins are strong.
But is that looking, and they've also been driving up the entire index. So is that looking at the banks and the banking sector independently of the economy, or is it tied to the economy?
Siddhartha Khemka: If you look at the financial sector, it is definitely tied to economic growth. You cannot have a banking sector growing without the economy not doing well. So that, I think, would have an impact if the economic slowdown happened, but it will happen over the next two, three quarters if economic slowdown doesn't pick up in India.
In the interim, what has happened is, if you see last few quarters, there was a concern on BINs, the cost of funds had gone up, liquidity was not there in the system. And that is something that this central bank has very actively pursued. So since January, we have seen a lot of liquidity ejections to OMOs, they have cut the CRRB, maybe, OSPOL-B, LCR, Liquid Typical Registration Requirement to next year.
So that, again, gets another freeze up, a lot of liquidity to the system. They have cut interest rates twice. So all these things are helping your cost of funds or cost of borrowings for the banking and the financial system.
On the other hand, if you look at banks like HDFC Bank, last post the merger with HDFC Limited, the biggest concern was on the deposit growth. While you had the credit growth coming down because of the high base and economic growth taking a backseat, I think there was a big concern on the banking deposit growth, which has started picking up. If you see HDFC Bank's results, deposit growth is in excess of 14%.
ICICI Bank, both deposits growth is about 16%, credit growth is at 14%. So I think that is showing, at least these companies are showing signs of resilience. And with the passing on of the interest rate cuts, the deposit rates going down, I think NIMS has started to see an improvement.
Again, ICICI Bank, pretty strong improvement in NIMS, 16 basis points on a sequential basis, much higher than the 4 to 5 basis points that we are expecting. Even an HDFC Bank has reported a stable NIMS improvement, marginal improvement in NIMS. And I think going forward, if the economic growth sustains, credit growth will again pick up about 8 to 10%. So we are expecting about 12 to 13% systematic credit growth in FY26.
Govindraj Ethiraj: What's your outlook for the next few months, rather than this quarter, Siddharth?
Siddhartha Khemka: As we said in between that, global impact is not that much for India. The only thing from a global standpoint is a trade negotiation, which is ongoing. And any outcome on that front, that will only add to the positivity.
So back home from a domestic standpoint, the only thing that remains is corporate earnings growth and outlook. And that is ongoing. As we said, banking is something that has been reporting strong numbers.
Financials also, we expect strong numbers. Some of the CapEx-themed sectors, I think that is where earnings may not be that strong. And I think over the next couple of weeks, the market will clearly be focused on the sectoral approach, company-specific approach wherever the earnings are coming forth.
I think that is where the market will look at. The other factor is that a lot of broader market themes or sectors have started to look better because of the positive outlook. While in the large-cap space, as we already discussed, A, banking and financials looked strong.
B, oil and gas. So it's a mixed bag because if the Kundal price comes down, you have the upstream oil companies which will face some pressure. But the downstream companies like the OMCs, that will do well.
Metals, again, it's a mixed bag, while the economic slowdown is a negative impact. But the dollar index coming below 100, that's a big positive. And that is why we are seeing some of the metal companies rallying.
Also, the government put up an anti-dumping duty of 12% on Chinese imports. I think that is also supportive. But sectors like cement are not doing well.
But as I said, within the broader market, there are themes which have started looking good. For example, the defence is looking good. The sector has seen a valuation compression.
And now again, with the Q4 witnessing strong order wins and delivery and execution, again, interest is coming back there. The other sector is your agri-imports, fertilisers, because of the monsoon prediction, that has started doing well. And the third sector from the broader market is the capital market theme.
Now, with the index recovering back almost to 24,000 levels, as we said, around 10% recovery from the bottom, I think again, the interest is coming back towards some of the capital market stocks, be it on the exchange, be it on the intermediaries like CAM, CDSL, or some of the asset management companies, wealth management companies.
Govindraj Ethiraj: Thank you so much for joining me.
Siddhartha Khemka: Thank you. Thank you so much.
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Meanwhile, on Wall Street, stocks rose on Tuesday as traders tried to recover following a rough day on Wall Street, as President Trump's latest criticism of Federal Reserve Chairman Jerome Powell hurt sentiment, reported CNBC, which added that the Dow Jones was up about 573 points in the morning. S&P 500 was up about 1.5%, and so was Nasdaq Composite, close to 2%. CNBC reported earlier that on Monday, there was strong selling with longer-dated Treasuries joining stocks and the dollar continuing to drop after Trump's attack on Jerome Powell's interest rate policy, which obviously unnerved investors already coping with a global trade war.
Elsewhere, oil prices bounced back as equity markets were also strong on Tuesday, though concerns persist over economic headwinds from tariffs and U.S. monetary policy that could hit fuel demand. Brent crude futures were around $67 a barrel on Tuesday afternoon, and the U.S.-West Texas Intermediate Crude Contract for May was at about $64. Meanwhile, this is important in a surprise but not entirely unexpected move, the International Monetary Fund has lowered its 2025 projections for U.S. growth to 1.8%, reflecting a cut of 0.9% from the forecast it gave in January. The IMF's chief economist said that the April 2 Rose Garden announcement forced us to jettison our projections, nearly finalised at that point, and compress the production cycle that usually takes more than two months into less than 10 days.
Gold
The economy might be slowing, equity markets might be suffering not so much in India, but gold prices continue to rise, and precisely for those reasons. Gold prices have hit fresh highs even as they touched Rs 100,000 per 10 grammes in India, crossing that psychological mark as well.
In international markets, gold hit the $3,500 mark on Tuesday as concerns over President Trump's criticism of Jerome Powell, the Federal Reserve Chair, increased risk sentiment further. Market analysts told Reuters that investors have been giving a white birth to U.S. assets amidst those tariff worries and the Trump-Powell dramas, which has kept gold in prime position to capitalize on everything. Asian stock markets struggled, but largely remained stable on Tuesday.
The big question is, where could Indian gold demand go? Akshaya Trithya, a festival during which many people buy gold, is coming up and could see lower demand thanks to higher prices, though of course traders are expecting that demand could be stable because the expectation is now that gold prices will rise further. The expectation part is reasonably justified.
Indian households own about 25,000 tonnes of gold as per estimates from the World Gold Council about two years ago, which accounts for about 11% of the world's total gold reserves in jewellery form.
Building on Blockchain
When you hear the word blockchain, you think of cryptocurrency but today, blockchain technology has evolved far beyond Bitcoin and digital tokens. It's quietly transforming industries from finance and logistics to insurance and agriculture by enabling more secure, transparent, and efficient ways to record and execute transactions. At the heart of many of these innovations is a powerful feature called the smart contract.
Imagine a world where insurance claims are settled in real-time. No paperwork, no agents, no back and forth. Just a simple, automatic payout based on conditions everyone agrees upon beforehand.
And that's not science fiction, it's already happening. Insurance companies are now leveraging smart contracts to process low-value claims for things like delayed flights or extreme weather events using public data sources as proof. Traditional banks are also adopting blockchain to speed up settlement times, cut costs, and improve trust across the systems.
So how does this work? In this segment of Build on Blockchain, we explore how smart contracts are reshaping the way we think about transactions, trust, and technology itself. From snowfall disputes in New Jersey, in the United States, to crop insurance in rural India, these examples highlight the incredible potential of automation when it's combined with decentralised technology.
Listen in as I dive into how smart contracts work, the role of oracles, and why this matters for both consumers and institutions with Nikhil Varma, Technical Lead in India for Algorand.
INTERVIEW TRANSCRIPT
Nikhil Varma: Traditional banks actually are adopting blockchain for fast settlements. AXA Insurance has started an insurance product for delayed flights with a smart contract, much more easier to access. The cost of servicing an insurance, if it's more than the cost of kind of, you know, the value of the insurance, you won't sell that insurance product.
But what if we have a technology-mediated solution, which runs on its own, right, which verifies everything? So the tables change here.
Govindraj Ethiraj: So there's identity, there's KYC, or knowing your customer, and then we come to the transaction, whatever the transaction might be. So where does the role of a smart contract come in, and how is it constructed, so to speak?
Nikhil Varma: So of course, identity is crucial for everything. Over here, without identity, these systems would not work. Smart contract is, as of now, they're at the stage one.
I would say the first version of smart contract that we have is nothing but an if-then-else statement, okay. It's like, if this happens, then do this, and we codify it. We kind of write it immutably in a ledger, right, and the verification of this is done by an oracle.
So define both for us, define the ledger and define the oracle. So essentially, blockchain, as we know, is built on AXA insurance, where blockchain does not store data. It's not a database.
Blockchain is a store of transactions, yeah. All of us will have ledgers, and there is some kind of a mechanism that our ledgers would have the same data. So whenever some kind of transaction happens between people, we record it in our ledger.
That's how we maintain the integrity of the data, yeah. So that's the construct of ledger in blockchain. And when it comes to oracle, oracle is, you know, not the oracle company, but oracle is something which has the knowledge, yeah.
Now we are building different kinds of oracles. So oracle is, suppose you and I kind of enter into a contract, yeah. We will say, based on this particular construct, this transaction will happen.
We both have to agree who is the person who's going to define that construct, okay. There could be different kinds of oracles. Oracle can be an IoT device.
Oracle can be an individual. Oracle can be an AI system. So both of us have to agree from the very onset.
So then we write a contract. Both of us kind of, with our digital signatures, we agree that if this particular thing happens, then we'll have some kind of a transaction happening. So that oracle could be a trigger.
It could be synchronous. It could be asynchronous. There would be a wide variety of things there.
Govindraj Ethiraj: So let's go back to that insurance claim, which is a low-value claim of 10,000 rupees. How would this process work there?
Nikhil Varma: So let me give you an example. You know, I live in New Jersey, and we used to have, in my townhouse community, a very interesting problem. So the contractor who would come and clean snow would tell us that, you know, if it is more than a certain amount of snowfall, then I'll come and clean.
And if it's more than a particular quantity, then I'll charge an extra. So I was in the committee and used to always have a fight with them because we would always say, hey, this site that you have is hosted by you guys. You control everything.
So if there is a snowfall that's not that much, you always report it underreported. And if it's a lot of snowfall, you overreport. You get me?
And over here, it was, you know, they would say, you know, we'll have to go with that site. So when a smart contract is set up, what happens is we both agree to the framework that we will agree to this particular oracle, that oracle is recording data, that transaction happens. So I bought rain insurance.
And if my crop goes bad, if there's too much rain and doesn't go bad, if there is less rain, we agree that we look at the Government of India's weather data. This is the site that we are going to be referring to for the water recording. Now, the person has a small app.
This is not like rocket science. And you don't have to be a tech geek to do this. You buy this rain insurance from your app.
And then, you know, if your crop goes bad, you just make a claim. Okay? It goes to the oracle, and computes the amount of rainfall.
Maybe it has already been computed just for faster processing. And if that verifies, it validates that condition that was initially set up, we'll get the claim. Real time.
T equals to zero. No more paperwork, no running around, no proving, no pictures, nothing. So that's the power of technology.
That's the power of smart contracts.
Govindraj Ethiraj: According to the FT. Meanwhile, Reuters quoted the US government saying it has made significant progress towards a bilateral trade deal following talks between Vice President JD Vance visiting India right now and India's Prime Minister Narendra Modi on Monday, laying down a roadmap for further discussions that India hopes may shield it from additional tariff hikes. The US is also looking to sell more energy and defence equipment to India, Vice President Vance said on Tuesday on that visit, adding that the ties between the two countries will shape the If India and the United States work together successfully, we are going to see a 21st century that's prosperous and peaceful, he said during his visit.
But he also added that he believed that if India and the US fail to work together successfully, then the 21st century could be a very dark time for all of humanity. Meanwhile, Prime Minister Modi is on a visit to Saudi Arabia as of Tuesday. And he said that India and Saudi Arabia are exploring joint projects and refineries and petrochemicals in an interview to Arab News.
He also said that we that India are working on feasibility studies for electricity grid connectivity or other interconnectivity between India and Saudi Arabia and the wider region. Reuters is also reporting that the share of OPEC that's the Organisation of Petroleum Exporting Countries de facto led by Saudi Arabia in India's imports fell to a record low in fiscal year 2425. As refiners continue to buy cheaper oil from Russia, the top oil supplier for the third straight year.
India has been tapping Russian oil sold at a discount after Western countries imposed sanctions on Moscow after its invasion of Ukraine. It'll be interesting to see how India balances the demands of the US to buy more energy from India, which will of course be mostly gas versus cheaper Russian oil. And of course, there's the OPEC countries who we are currently meeting the de facto head of Saudi Arabia.
Now back to Amazon and Walmart, they face restrictions on holding inventory and directly selling to consumers unlike domestic companies like Reliance, which can open physical stores and leverage their vast retail network. The White House said that the two sites that India and the United States have finalised the terms of reference for negotiations on a new and modern trade agreement. India faces up to 26% of tariffs on exports to the United States under the April 2 levies currently of course on a 90 day pause and pending a fresh deal that India is hoping for.
Trump has repeatedly and publicly criticised India for its high tariffs and even called it a tariff king.
Lessons From The Federal Reserve's Problems
The US President has stepped up pressure on the Federal Reserve, insisting that there was virtually no inflation and it was time for preemptive cuts. The last reading of the Federal Reserve's preferred inflation gauge remains above the central bank's target and there will be a new readout next week, Bloomberg reported. These comments raise new questions of whether the Fed can maintain its longstanding independence with the President, increasingly expressing his dissatisfaction that the central bank hasn't moved to lower interest rates, said Bloomberg.
It also quoted analysts saying that there is virtual unanimity amongst economists that monetary independence from political interference that the Fed or any central bank be able to do the job that it needs to do is really important. Meanwhile, there have been several fallouts because of this war, though that's not the only reason. The Bloomberg dollar spot index fell about 0.7% on Monday and all Group of 10 currencies gained against the dollar, said Bloomberg, and the Nikkei also was down, but the jump in the yen weighed on stock indices in Japan. In a sign that investors are rotating investments away from the US, Deutsche Bank said the Chinese lines have reduced some of their treasury holdings in favour of European debt, according to Bloomberg, and who also quoted a bank analyst saying that European high-quality bonds, Japanese government bonds, and gold are likely to be the potential choices for investors as alternatives to treasuries. With Trump raising the pressure on the Federal Reserve to cut interest rates and also sack the governor, this is a useful moment to pause and ask why is the independence of the central bank important and perceived to be important? Why is it that investors are turning nervous even as Trump steps up that pressure, and what can we here take away from that event or the set of events?
To discuss this, I'm joined by Ashok K. Bhattacharya, editorial director and columnist at Business Standard, and I began by asking him the very straight question, what is the lesson for India?
INTERVIEW TRANSCRIPT
Ashok K Bhattacharya: The power of the executive on appointing and sacking monetary policy authority, CEO of that organisation. I think the US system is probably far more refined and its system takes care of these risks of executive overreach. So, as you would have seen, Chappawal was nominated, nominated by the President, Mr. Trump in 2018, but his appointment has to be endorsed by the Congress. So, he is not the executive appointment. So, in a sense, the regulator's appointment cannot just be responsibility and the authority of appointing the regulator should not just rest with the executive. Now, something similar is here in India.
It's like when you want to appoint a CVC, you have to have a committee in which the Chief Vigilance Commissioner has to be appointed by a committee of three members, one, two from the executive and one from the opposition. Now, it's a different matter that if there had been a fourth member, maybe he could have been from a judiciary, the independence of appointing a regulator like the Chief Vigilance Commissioner would have been more secure, I would say. But in the case of let's say take India's RBI.
Now, India's RBI is appointed solely by the executive. And this is not something that has happened now. This is an old tradition, as early as Jawaharlal Nehru had fought, his government had fought a battle with the RBI governor and actually made it known to him that he was part of the government.
So, therefore, the big lesson that I would draw from what is happening in the US is whatever Mr. Trump may be saying, but his power to get rid of him before his term ends is severely limited. He can rant about it, but he cannot really sack him in that sense. In India, if the executive does not like the regulator or the RBI governor, the RBI governor will be in a sense obliged to quit or he may even be sacked.
There is a provision under the RBI Act, under which the government can actually raise issues and terminate his service. So, I think that's a lesson that the guardrails that you have in the US system and the absence of those guardrails that you have in the system. Now, in India, there is another dimension to this debate, which is the elected leaders and unelected regulators.
Now, there was this big debate sometime back that how can an unelected regulator have preference and have a certain position that he enjoys, which is better than the elected regulator who is speaking on behalf of the people. So, I think this debate needs to really take place in this country and we must find a solution to this. I think the US model is a good model.
Govindraj Ethiraj: So, now, if I were to look at the outcome of the tensions in the US now between the President and the Federal Reserve Governor, the markets are worried and treasury yields are going up, which means money is going away from US treasuries, which means people are fundamentally losing trust in that system. What does that tell us and why should the markets be worried if all of these arguments hold true that the Federal Reserve Governor or the Governor of the Central Bank is really responding only to the larger needs of the country, which is the United States in this question?
Ashok K Bhattacharya: Well, the markets are going down, are being jittery, and not just because of what Mr. Trump has said about Mr. Powell. I think the markets are showing signs of nervousness for a variety of factors. If you look at the IMF report, we will see that there are bigger reasons the markets are worried.
It is because of the economic growth, because the trade is going to take a severe knock. So, therefore, markets are deflecting that concern. They are worried about what the President might do to Jeremy Powell, but I have a sense that he cannot, apart from saying those, making those comments, I don't know whether he can cut short, I'm reasonably certain that the law doesn't allow the President to issue an executive order to terminate him.
And in any case, Mr. Powell's term comes to an end next year. 2026 is the four-year term, coming to an end. So, I have a feeling that when that term ends, he will obviously not be, the extension will not take place, and Mr. Trump will nominate another candidate, and that candidate will have to be vetted and passed by a congressional committee.
Govindraj Ethiraj: But to the extent that if there is tension in the air or around the central bank, it does send off signals of uncertainty to investors. I'm wondering if there are any lessons there. I mean, not that India's central bank is transmitting signals that are different or suggesting that things are not all right, going off on a completely different tangent from where the government's policies are going.
But is there a lesson in this, that the need to transmit the sense of independence is equally important going forward, even if at some point you were to be, let's say, shifted or moved as the central bank governor?
Ashok K Bhattacharya: I couldn't agree with you more on this. I think this tension is necessary. The fiscal policy authority and the monetary policy authority, they cannot have any of sorts all the time.
I mean, ultimately, both have to address the concerns of the economy, and they will do it their own way. In India, what we have seen in the past is that, take the famous case of a finance minister who said that if the Reserve Bank of India governor does not cut interest rates, I will rather walk alone. Now, that was a statement, something I would say not similar, but showing a clear sign of the difference of opinion between the finance ministry and the Reserve Bank of India.
Now, I think that healthy tension, if it remains healthy, is fine to my mind. But I think if there is a sense in the market that the Reserve Bank of India governor exceeds the brief that the government has given him, he will lose his job. I think that will create tension and uncertainty in the market.
For example, even the last governor, the Reserve Bank of India governor, was not really cutting interest rates, even though there were a lot of overtures, suggestions being made to the Reserve Bank that maybe it's time to cut interest rates. But he was using his own economic assessment to say that the time is not ripe, inflation as a beast has not yet been tamed. So I think that healthy tension is good for the economy, good for the markets.
What is not good for the market is when there is uncertainty over the tenure of a regulator, in this case, the governor of a central bank, just because he differs with the fiscal policy authority or the government.
Govindraj Ethiraj: Thank you so much for joining me.
Ashok K Bhattacharya: Thank you. Thank you very much.
The Yen Against The Dollar
More currency news, the yen advanced past the psychological level of 140 against the dollar amidst threats to the independence of the Federal Reserve. Heightened risks concerning tariffs to the meeting between the finance chiefs of Japan and the US ahead, according to Bloomberg. The yen is appreciated as much as 0.7% against the dollar, its strongest level since September. The yen is the best performer amongst its group of 10 peers against the dollar on Tuesday. The Indian rupee ended weaker on Tuesday in line with regional currencies that also fell. Tracking the Chinese yuan but potential portfolio inflows into local stocks helped the currency avoid further losses, said Reuters, adding that the rupee closed at Rs 85.18 against the US dollar compared to its previous close of Rs 85.12 in the previous session.
The Battery Stakes Get Bigger
China's CATL, the world's largest supplier of EV batteries, has now announced a set of new products, including a battery it claims has set a new global record for super-fast charging technology, according to CNBC. CNBC quoted a post on WeChat by the contemporary Amperex technology company CATL, saying its second-generation Shenzhen battery could add 520 km of driving range from just 5 minutes of charging time, which is of course only a little longer than what it takes to refuel a full tank on a gas car. This claim appears to put CATL ahead of Chinese EV giant BYD, which last month also surprised everyone by claiming a charging system that could add 400 km to its range in about 5 minutes.
CNBC does point out that analysts were sceptical about BYD's claims, noting the potential technical hurdles and higher costs, but obviously everyone is hoping that these claims come true in some way or the other. Tesla's superchargers, in contrast, can add 270 km in 15 minutes, while Mercedes-Benz said recently its batteries can recharge up to 325 km within 10 minutes. So the Chinese offerings and claims are pretty far ahead right now.
CATL said that the new Shenzhen product offers a range of 800 km and a peak charging power of 1.3 MW, and it added that the battery outperforms the industry's highest current charging level in low-temperature environments of minus 10 degrees Celsius. It also revealed new batteries with its Nextra series, which it said would be the world's first mass-produced sodium-ion battery, reducing the EV industry's reliance on lithium. The use of sodium-ion can help decrease maintenance costs and is capable of performing in extreme temperatures of minus 40 to plus 70 degrees Celsius, according to the company.
