The Markets Return To Pre 50% Tariff Levels
The markets closed higher for the fifth consecutive session on Tuesday, thanks to a jump in information technology stocks on Infosys' share buyback plan
On Episode 673 of The Core Report, financial journalist Govindraj Ethiraj talks to Anuj Gupta, Commodity Expert, Suresh Narayanan, former Chairman and Managing Director of Nestle India as well as Apoorva Bajaj, Founder of Edubuk.
SHOW NOTES
(00:00) Stories of the Day
(01:00) The markets return to pre 50% tariff levels as economy appears to absorb shocks.
(03:14) Another $20 billion of IPOs could come this year
(05:52) How Indian consumers are satiating their appetite for gold despite prices rising to record levels.
(10:00) Pressured Indian households will welcome lower prices on items of daily consumption. But household priorities have changed too.
(17:22) How a university in the US confirms whether a certificate from an Indian university is a genuine one.
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].
—
Good morning, it's Wednesday, the 10th of September, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital, which is decidedly brighter now, thanks to no rains for two days plus.
Our top stories and themes,
The stock markets return to pre 50% tariff levels as the economy appears to absorb shocks.
Another $20 billion of initial public offers could come this year.
How Indian consumers are satiating their appetite for gold despite prices rising to record levels.
Pressured Indian households will welcome lower prices on items of daily consumption, but household priorities have changed too.
And how universities in the US confirm whether a certificate issued by an Indian university is a genuine one.
It's an IT Show
It was somewhat of a one-trick pony show on the bourses, all for good, of course, and 50-50 closed higher for the fifth consecutive session on Tuesday, thanks to a jump in information technology stocks on Infosys' share buyback plan, and then from the global markets, the likelihood of US interest rate cuts determining pretty much the movement of everything. Infosys said it will consider a share buyback in a board meeting scheduled for tomorrow.
That's the 11th of September. It was also the top gainer in the Sensex 30 shares and was up 5% and it alone contributed about 217 points in the BSE Sensex's rise. Now the Sensex, which of course held to mostly higher levels today, as opposed to the whipsawing we've been seeing in the past, closed 314 points up at 81,101.
The NEC Nifty 50 was up 95 points to 24,869. In the broader market, the Nifty mid-cap and small-cap were also up about 0.3%. The business standard said that some 108 stocks hit 52-week highs, while 43 hit 52-week lows. So the markets are now back to the pre-tariff phase, which is perhaps a good indicator of the sheer liquidity rush that we are seeing.
A note from Bank of Baroda Research says the stock markets went down after the 50% tariff. The rupee fell, foreign portfolio investment flowed out, bond yields were unsettled, and the Federal Reserve had also indicated that there could be rate cuts coming in September. At the same time, we've seen the new GST tax cuts, known also as GST 2.0 reforms.
And that's also, interestingly enough, and perhaps predictably created an apprehension that there will be a slippage in fiscal deficit, since it would be an increased burden on the government and therefore an increase in borrowing. That caused, according to BOB, the 10-year bond to cross the 6.6% mark, even while at the shorter end, yields were stable. But on the whole, says BOB, it looks like all these shocks have been absorbed and we could be getting back to normal.
The tariff impact will of course be there, and quite likely there will be job losses. That's not BOB saying it, that's me. But the GST cuts can maybe provide some counterbalance.
So back to BOB, they're saying that we are still talking of growth in the region of 6.5%, and inflation, of course, will trend downwards with all these GST cuts and more on inflation in a moment. The markets are meanwhile steady, as we've said, and actually better off than before the 50% tariff was imposed by the United States on imports into that country. But a flood of initial public offers here promises to keep the pressure high and also continue to, of course, transfer wealth, additionally, that is, from small investors to existing promoters and institutional investors, as we've seen in the past as well.
Large Indian companies have already raised about $8.2 billion through IPOs till August this year, a Reuters report says. What they mean is large Indian companies and their promoters and exciting investors. And it also says that another $17 to $20 billion of fundraising through IPOs in 2025 could be on the horizon.
So on the bullish side, we could see close to $28 billion of IPO raise in this year. In 2024, that figure was about $20.5 billion or just over $20 billion, making India the world's second biggest IPO market in terms of funds raised after the United States. And it continues to retain that position according to Reuters data.
While the IPO market, for lack of any other word, is booming, inflation may rise. The fading impact of high base effects has mostly pushed up India's CPI or consumer price inflation higher for August, ending a nine-month streak of declines according to a Reuters poll of economists. And also to note is that food prices have risen now, which account for nearly half of the consumer price basket.
Consumer inflation rose to 2.1% in August from 1.55% in July, according to a poll of about 40 economists conducted between the 4th and 9th of September. However, at this level, it's still a seven-month low in a row of inflation staying below the Reserve Bank's 4.0% medium-term target. So the latest August figures will be released on Friday morning.
Meanwhile, on Wall Street, the Nasdaq composite hit a record high on Monday, rather close at a record high, and was up about 0.45% to 21,798 after hitting a new all-time intraday high in the session. Investors are waiting for two critical inflation reports this week for more insight into the health of the U.S. economy after weaker-than-expected hiring data on Friday. There's been a lot of other backward revisions as well.
The producer price index report for August is due on Wednesday morning, followed by the consumer price index on Thursday, according to CNBC. Back home, the rupee was stronger thanks to weaker U.S. jobs data that we just referred to, and also the Federal Reserve rate cut. The rupee has been amongst the worst-performing Asian currencies this year, Reuters reported, adding that on Tuesday, it rose to Rs.88.10 against Rs.88.26 on Friday, and the forex market was closed on Monday.
And then gold hit a fresh high on Monday after Friday's unexpected weak U.S. employment report. Bullion has risen, or rather rose, about 1.7% to more than $3,646 per ounce, crossing the Friday record. In India, gold is now over Rs.110,000 per 10 grams for 24-carat gold, a figure that would have been unimaginable a year ago.
I reached out to Delhi-based commodity expert Anuj Gupta to find out how and where prices were headed after these record highs.
INTERVIEW TRANSCRIPT
Anuj Gupta: Whenever we talk about gold, we are expecting that it may rise and we have seen in the last three years, it increased sharply. In this year, it increased by almost 40%, more than 40%, we can say that. In the initial level, it tested the high of almost $3670, $3670 per ounce in the international market and in the domestic market, it tested the high of $1,09,700.
So that is a very phenomenal return in the gold prices and we are expecting that it may rise further because there is lots of geopolitical tension, there is lots of tariff tension, there are lots of central banks buying and there is also lots of ETF buying by the investors. So here we can say that from the geopolitical perspective to investment perspective, both are supporting the gold prices.
Govindraj Ethiraj: So one of the things that happens when prices rise is obviously demand on the jewellery side slows down. Could that keep prices steady or is that too small a component in the overall gold demand basket?
Anuj Gupta: You're definitely right because if we check one year before, the 10 gram gold was costing around 80,000 per 10 gramme. But right now, if we check 10 grams of gold, it is now costing around 1,10,000 on NCX. But if you include 3% GST, it will be around 1,13,000.
So if we check that, the 24 carat gold price is almost 1,13,000. But if you check now , 22 carat gold or 20 carat gold is almost around Rs. 1,00,000.
So the jewellery part is definitely costlier in terms of gold. And even though we have seen due to the higher price, the demand for gold is decreasing. Not that demand is increasing, even the carat, even you can say the component of the gold in the jewellery is also decreasing.
So now people like to buy 18 carat gold or 14 carat gold. And even we have recently seen that 9 carat gold is also available in the shop. So, you know, people are definitely buying the gold, but now the carat of the gold is decreasing.
So here is the reason that gold prices are increasing.
Govindraj Ethiraj: So people are down trading. So pretty broadly in the next 2-3 months, Anuj, how are you seeing the demand components? I mean, do you see Central Bank, for example, Central Bank buying remaining as strong as we've seen it in the past or plus some of the other components like bullion and ETFs and so on?
Anuj Gupta: Definitely in the last 2 months, if you check that India is also buying the gold and even China is adding the gold in, China Central Bank is also adding the gold. So the Central Bank's demand for gold is continuing in place and they are accumulating the gold as a result. As well as we have seen that the gold ETF demand in the international platform or in domestic platform, we have seen increasing.
After the discontinuation of Sovereign Gold Bond, we saw that investors are looking towards the gold ETF as an investment option because gold ETF is a paper form and is easy to carry, easy to hold or easy to invest. So the demand for the investment side is also increasing. Apart from that, we have seen people like to buy raw gold in the Cadbury kind of thing.
So that is also increasing. I'm expecting that in the coming time, gold price will increase in terms of support for investment demand as well as physical demand.
Govindraj Ethiraj: Anuj, thank you so much for joining us.
Price Cuts And The Consumer
Last week, the government unveiled a host of tax cuts, or goods and services tax rate cuts, mostly on items of daily consumption, including personal care. In addition, tax cuts have also been announced on bigger-ticket items like cars, air conditioners, and refrigerators.
There are now two major slabs of GST at 5% and 18%. While this will undoubtedly act as a demand booster, how much could that be, and what is the context? More importantly, should this cut in consumption tax be viewed? And could customers or consumers respond differently this time in contrast to previous occasions when there have been some price cuts? The history would be interesting. I spoke with Suresh Narayanan, former chairman and managing director of Nestle India, and I began by asking him how he was reading the impact of these new rate cuts.
INTERVIEW TRANSCRIPT
Suresh Narayanan: I think, you know, off the bat, I would say that this is a very welcome step, Govind, that has been taken.
Two reasons. One is that I think inflation, especially poor inflation, has been impacting the lives of middle India quite considerably in these past years. And that has also led to a kind of recalibration of their budgets, away from more discretionary products into more essentials.
I think the reduction in the number of slabs and also the sharp reduction that has been done in everyday items is definitely a welcome step in order to stimulate consumption, given that consumption is the mainstay of the GDP. So, I think it is a very good step. And together with the mitigation of inflation as it were, even before the step, this can only accelerate the pace of consumption and bring back some of the zip in the economy that we needed for a long time.
Govindraj Ethiraj: Right. And when you say that, you know, people had started switching from discretionary to essentials and we could see some of that switch back. Can you illustrate that switch that's happened because of inflation or inflationary pressures from your vantage point?
Suresh Narayanan: See, one of the things, Govind, that has been observed, and I think there is enough evidence to show that, is that the pattern of consumption expenditure also has been changing over the past years. You know, food has always been a dominant part of the consumption expenditure. And then followed by rental, education, non-discretionary items, etc.
Now, one of the things that has been happening is that because of the very high rentals and the real estate boom that has been taking place in some of the urban centres, the rental component and the education component has been increasing at the cost of some of the other what one would call essential or discretionary items of expenditure. Now, hopefully, with the reduction in the GSTs, which has been quite sharp, it will stimulate some of the long lost capabilities at balancing the budget through lower prices. And that will be clear for some of the essential products because many of us, I recall at Nestle when I was the head of the company, were bitten by a lot of high commodity inflation, whether it was coffee or cocoa, or oil complexes or wheat, or even milk for that matter.
And the result is that we had to take, if you are not able to mitigate some pretty sharp price increases that obviously came with the bill of reduced consumptions. Hopefully, that trend will now get reversed over a period of time.
Govindraj Ethiraj: Right. And if you were to look between, let us say, the price rise in the inputs versus the pressure that consumers have been facing on their own budgets, what would you say has been more prominent or dominant?
Suresh Narayanan: Look, I think till these rate cuts have been made, the input cost increases have really been on top of the mind of most consumer marketeers and also in fact, even consumers. And therefore, that has led to a sharp shrinkage as far as consumption itself is concerned. I think on average, the reduction in the GST because of the banding effect that has taken place is anywhere between 500 basis points to about 700, 800, 900 basis points.
So, that is fairly substantial and certainly takes care of mitigating a lot of the commodity inflation that has been faced. And incidentally, even commodities, and here I am referring to largely food commodities, seem to be on even keel at the moment. In fact, with marginal declines in some of the exacerbated levels that we have seen.
So, hopefully, this will generally mean a relief for the average Indian consumer.
Govindraj Ethiraj: Right. And one of the objects of my conversation today with you is to understand how consumer behaviour has changed, if so. So, let me pick up on the point that you made just now.
You said that one reason why there has been a shift this time around is because of the high cost of real estate that people are bearing. It could be in the form of loans or it could be in the form of rents. And the second, of course, is the cost of education, which people are obviously spending more on because they are spending more in general as well, apart from the fact that the cost is going up.
So, how does this contrast with previous periods and previous, let us say, consumer spending trends?
Suresh Narayanan: Look, firstly, Govind, the kind of levels of inflation that we were seeing were kind of unprecedented. I mean, I do not recall in the past years, food inflation of 10 to 12 percent on vegetables and fruits, for example, 15, 16, 20 percent levels of inflation. Obviously, people and the real wage increases also, at least what has been indicated in the media, has been muted.
So, with the real wage increase, which is muted and inflation being fairly sharp, it has restricted consumption to some extent. That is not the only reason why we have the kind of consumption impact as it were. Also, it has been recalibration of expenditure, as we said, because of calibration of loans and of real estate costs and education costs.
But I think this time around, it looks much more manageable because of the steps that the government has taken. One is, of course, the income tax relief on below 12 lakhs of rupees income that hopefully will start to play out in the current financial year. Some of it will go towards mitigating some of the loan repayment commitments.
Some of it may go towards increased savings, but at least some part of it will come and which part of it, one can only speculate at this stage, will come in place for additional consumption. But the drop in the GST rates and the overall more benign nature or stature of inflation should hopefully be auguring better for economic growth than what it was in the past.
—
This conversation with Mr. Narayanan is courtesy of PRCAI's Prana 2025, India Rise Story, Reputation Through Innovation, Sustainable, and Entrepreneurship. And that's something that's happening in New Delhi today.
Building on Blockchain
Today, one of the biggest challenges in education and employment is trust. Traditional systems that scan documents, PDFs, or verification agencies are slow, expensive, and vulnerable to fraud. Even in the web 2 era with digital transcripts and LinkedIn profiles, authenticity at scale is a challenge.
So blockchain does change this by embedding trust into the technology itself that's tamper-proof, instant, and universal. One case study of this shift is Edubook where founder Apoorva Bajaj is working to restore credibility and credentials through blockchain-powered verification and specifically in areas like university certificates when seeking admission, for example, in universities in the U.S. So how does the university in the United States verify whether the certificate that you hold from an Indian one is authentic and genuine? I began by asking Apoorva to walk us through how blockchain actually secures that certificate.
INTERVIEW TRANSCRIPT
Apoorva Bajaj: It relies on a hashing algorithm — specifically the SHA-256 function. This is an irreversible process. Every document — whether a PNG, JPEG, PDF, or even a video — is assigned a unique alphanumeric hash, usually 16–22 characters long.
The hash acts like a digital fingerprint. From the hash, you cannot recreate the document. But if you alter the document even slightly, the hash changes immediately.
Once an institution uploads a genuine certificate to the blockchain, a hash is generated and permanently recorded. On Algorand, for example, anyone can check this through AlgoScan. A university’s blockchain record shows exactly when a certificate was uploaded. If a student later submits a tampered version for verification — for studying abroad or transcript checks — the hash of that document will not match the original.
In our system, the verification result is clear: either the certificate has been tampered with, or it was never uploaded to the blockchain. Since we work mostly in B2B collaborations, most discrepancies we detect fall into the “tampered” category. That’s how fraud is caught. Importantly, the process is completely secure because the hash cannot be reversed to recreate the original document.
Govindraj Ethiraj: So it’s safe. But are there still cases where certificates already uploaded on the blockchain are later submitted in tampered form?
Apoorva Bajaj: Yes, though the number is very small. We inform universities and students upfront: once a certificate is on the blockchain, any tampering will be immediately exposed. Out of around 25,000 certificates, only 10–20 cases show signs of tampering. The vast majority remain compliant, so it isn’t a significant issue.
Govindraj Ethiraj: And students or potential employees can simply share the blockchain link or address with employers for verification?
Apoorva Bajaj: Exactly. Employers can verify directly without requiring another copy of the document. The blockchain record itself is the proof.
—
And look out for more insights on blockchain and how it can transform businesses as we count down to the third Algorand India Summit 2025 to be held on the 6th and 7th of December at the ITC Gardenia in Bangalore.
