Weak Earnings Are Now Putting Pressure On Indian Markets
The Greenland effect had its desired impact with markets world over sliding
On Episode 777 of The Core Report, financial journalist Govindraj Ethiraj talks you through the top business news of the day. We are also featuring excerpts from our recent India Energy Week interview featuring Arun Kumar Singh, Chairman and Managing Director at the Oil and Natural Gas Corporation (ONGC) as well as from our In Studio interview featuring Anuj Kumar, Managing Director at CAMS.
SHOW NOTES
(00:00) Stories of the Day
(01:19) Weak earnings are now putting pressure on Indian markets
(04:00) Mutual fund investors have not had a good year, will they hold on?
(07:00) Wall Street’s Magnificent Seven are coming apart
(08:40) Gold, silver hit fresh highs. Silver prices are up 30% this year already or in three weeks
(09:16) IMF raises India growth projection slightly to 7.3% for current year
(10:28) The art and science to exploring and drilling for oil
(21:37) How women investors are becoming sole owners of mutual fund accounts
Register for our Exclusive live event on the Budget 2026
Register for India Energy Week 2026
https://www.indiaenergyweek.com/forms/register-as-a-delegate
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.
—
Good morning, it's Tuesday the 20th of January and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital and our top stories and themes…
Weak earnings are now putting pressure on Indian markets.
Wall Street's magnificent seven is coming apart.
Gold, silver hit fresh eyes. Note this down, silver prices are up 30% this year already or in three weeks.
Mutual fund investors have not had a good year. Will they hold on?
The art and science to exploring and drilling for oil.
IMF raises the India growth projection slightly to 7.3% for the current year.
How mutual fund investors are now seeing more women investors becoming sole owners.
The Earnings And Greenland Effect
The Greenland effect had its desired impact with markets world over sliding. The question now is what will be the next step in US President Donald Trump's famed negotiation playbook.
Whatever the next step is, it's once again been amply demonstrated that no agreement, tariff or otherwise in this era signed with the United States can be depended upon. Gold and silver prices hit fresh intraday highs after President Trump said he would impose tariffs on several European countries for opposing his plan to take control of Greenland. Stocks across Europe fell and futures on Wall Street, which is shut for Martin Luther King Jr. Day, also fell.
The somewhat pro-Trump administration Wall Street Journal pointed out that this bullying plays poorly with the European public, making it harder for politicians to give Mr Trump what he wants on Greenland or anything else. The message to these countries, says the Wall Street Journal, is that no deal with Mr Trump can be trusted because he'll blow it up if he feels it serves its larger political purposes. Meanwhile, in a move bound to rile up Mr Trump further and raise tariffs on India too well, we've stopped calculating.
The Reserve Bank has proposed that BRICS countries link their official digital currencies to make cross-border trade and tourism payments easier, according to an exclusive Reuters report. Now, that move could reduce reliance on the US dollar as geopolitical tensions rise, which obviously seems like a good idea. The Reserve Bank of India has recommended to the government that a proposal connecting the central bank digital currencies, CBDCs, be included in the agenda for the 2026 BRICS summit, which India will host and will be held later this year.
If that recommendation is accepted, and it is a recommendation right now, even as per this report, that proposal would be put forward for the first time. The BRICS organisation includes Brazil, Russia, India, China, and South Africa, among others. US President Trump has previously said that BRICS alliance is anti-American and threatened to impose tariffs on its members.
Back home, foreign investors are still selling. Indices are down over 2% since this year started, and the year started barely three weeks ago. Since their peaks last month, the markets have fallen now around 3%.
On Monday, they fell after disappointing quarterly earnings from several blue-chip companies weighed on sentiment. The Nifty 50 and Sensex are at their 10-week closing lows, according to Reuters. Heavyweights like Reliance Industries and ICICI Bank were the big drags, falling 3.2% after missing quarterly earnings expectations, said Reuters.
At close, the BSE Sensex was down 324 points to 83,246. The NEC Nifty 50 was down 108 points to 25,585. In the broader markets, the Nifty Mid Cap 100 was down 0.3%. Nifty Small Cap was down 0.9% or 0.1%. Earnings are not what they were expected to be.
An Economic Times report says, for a sample of 159 companies that have reported results for each of the 13 quarters to December 25, net profit grew 5.1% year-on-year, the slowest in at least nine quarters, making the second straight quarter of single-digit growth. Revenues rose 7.4%, remaining in single digits for the seventh consecutive quarter, and operating margins have contracted 230 basis points year-on-year to 21.6%, that report from the Economic Times said. So how could investors react to all of this? For example, mutual fund investors, particularly the Systematic Investment Plan or SIP variety.
The good news is that slick apps or slick broking apps have led to people creating SIPs with a swipe or two and then mostly forgetting about it as they should. The bad news is that many could be noticing now that returns are slowing down, if not reversing, and they may just start stopping those SIPs. After all, people are constantly checking their mutual fund portfolios, which you usually do not do, and more on that shortly.
A report from Kodak Institutional Equity says that their analysis of direct and indirect equity holdings of retail investors shows that retail portfolios, direct holdings, or through mutual funds and portfolio management schemes have 1. Trailed index returns and 2. Barely delivered positive returns in the last 16-18 months. It also warns that weak trailing returns over the past 18 months may increasingly test retail investor patience. It also says that their analysis of weighted average net asset values of equity-orientated mutual funds suggests retail investors likely made very modest returns.
Between July 24 and 25 saw 53% of the flows seen between 2022 and 2025. The report also says mid-cap, small-cap, and thematic funds performed similar or worse than overall equity mutual funds over the past 18 months while they garnered the bulk of the flows in the last two years. The report also looked at the top 20 PMS or Portfolio Management Scheme strategies by Assets Under Management, which suggests that only a handful of schemes delivered decent returns in the last 12 months.
Again, the PMS industry has received very strong inflows over this period because obviously there's been a lot of cash outs and wealth creation. So how would things have been if you were a retail investor directly investing in stocks? Well, the Kotak Institutional Equity's report says that their analysis of the top 20 retail-dominated stocks in the current Nifty 500 index suggests that this portfolio has delivered negative returns since June 2024 after astronomical returns between March 2023 and June 2024. So if you were of course an ace in timing these things you could have been making money, converting into cash, and sitting down in the last 18 months or so.
Now all of this is suggesting that there could be nervousness ahead unless of course all retail investors stay invested and stay the course. Now that could happen but it usually does not. There's a lot of reorientation happening on Wall Street too.
An insightful report in the Wall Street Journal says the Magnificent 7 is now the Mag 5 or it asks is it the Fab 4? Investors are no longer grouping the market's big tech stocks together in quite the same way. The fortunes of what were once Wall Street's favourite band of mega cap names have diverged in the past year as professional and ordinary investors alike take a more cautious view of the AI spending boom, says the Wall Street Journal. Only Alphabet and Nvidia outperformed the S&P 500 in 2025 and so far this year, five Mag 7 stocks are faring worse than the broader benchmarks, says the Wall Street Journal.
Now the Magnificent 7 includes Microsoft, Meta, Apple, Amazon, and Tesla apart from Alphabet and Nvidia. One analyst told the Wall Street Journal that the correlation has fallen apart. What they have now in common is really being trillion dollar companies.
A Bank of America strategist Michael Hartnett, who is credited with coining the Magnificent 7 moniker back in 2023, told the Wall Street Journal that you're starting to see it broaden out. The name Magnificent 7 comes from the classic western movie featuring seven heroic gunfighters and their fight to save a small town from bandits. Hartnett says the next Magnificent 7 will be the mega cap companies who can show that AI adoption is transforming their huge businesses.
He concludes, don't forget that in that film, only a few of those Magnificent 7 survived. And back home, the rupee reversed course and fell for the fourth consecutive session on Monday thanks to corporate dollar buying that was further complicated by a shortfall in supply according to Reuters, which added that the rupee ended at 90 rupees 91 paise to the dollar, its lowest closing level since December 16th. Gold and silver prices, of course, were at record highs on Monday thanks to a fresh flight to safety, which we of course see almost every day now.
Spot gold jumped to about $4,662 after hitting an all-time high of $4,689 per ounce. Gold has gained 64% in 2025 and has been up more than 8% this year. Silver was also up and hit a record high of $94.08 and has risen over 30% so far this year.
I repeat, 30% so far this year.
IMF Growth
The International Monetary Fund on Monday, or IMF, raised India's growth projection to 7.3% for the current year, that's 25-26, up 0.7 percentage points from its October forecast, on the back of better than expected performance in the economy.
It also revised India's GDP growth forecast to 6.4% for the next year, that's 26-27, that starts on April 1st, 2026, from its earlier estimate of 6.2%. In its World Economic Outlook, it said that India's growth is revised upward and that reflects the better than expected outturn in the third quarter of the year and a strong momentum in the fourth quarter. Now, the growth is, of course, expected to moderate as cyclical and temporary factors wane, the IMF said. Meanwhile, Moody's ratings on Monday projected India to also clock a 7.3% growth in the current year and said the strong economic expansion would support average household incomes and stimulate demand for insurance protection.
It said that it expects India's economy to grow 7.3% in the current year and that's up from 6.5% the previous year. All of this is from a Press Trust of India report.
The India Energy Week Segment
India's oil exploration giant, ONGC, is investing heavily in ramping up oil production, including of older oil wells, with newer technology and collaborations. The larger objective is, of course, to reduce India's dependence on crude oil imports, which is about 85% of our needs today. Drilling for oil is, of course, a combination of heavy and hard engineering and statistical breakthrough and, of course, risk.
But it's equally about reducing the risk, which is lower than before, thanks to advanced technology, including artificial intelligence. As part of our special India Energy Week segment, I spoke with ONGC Chairman AK Singh two weeks ago and I asked him to walk us through ONGC's approach to hunting for oil this year.
INTERVIEW TRANSCRIPT
Arun Kumar Singh: First and foremost, if you notice the world for last 10 years, all the exploration and discoveries and large production has started coming from deep water and outer deep water, primarily predicated on the success of three factors. The western hemisphere, which was not so good in oil and gas, so suddenly you find that Guyana happened, then you find Brazil kicking big, then you find Canada adding, then Permian added. So, American, North and South America, particularly became the new hotspot of oil and gas supply.
That explains away the current geopolitical and pricing of crude also. So, conventional areas of onshore or shallow water exploration probably is at the end of its... Big explorations are coming basically from the deep water and outer deep water.
ONGC has been doing deep water and outer deep water. We drilled around 60 wells other than even eastern offshore in these areas. But somehow our probability of success is far from satisfactory.
So, one of the things that we certainly know that two things matter most, you should be also mindful that our large sedimentary basins are offshore. Sedimentary basin is where oil and gas is found typically, is deep water and outer deep water and shallow water also. Shallow water we have explored in Bombay and we're exploring, we will continue to explore for next 30-40 years.
But deep and outer deep water, if you see, it is mostly eastern side and also some part of Saurashtra. Now, there are two components, as I told you, very, very essential. One is that our digital imprint on these exploratory work has to improve to improve the probability of success.
I'm not saying that digitally they can lead you to exact spot, but probably it can derisk your drilling to a large extent because each well costs around 800-2000 crores. And second part is somebody who knows better than you because they're ahead in the learning curve. We'll also learn.
It is not that we are not going to learn. We'll become better of them, more so because now the Indian, particularly the Global Capability Centre story is very strong. And, you know, we'll get to here.
We find that they're almost tapping everywhere, Indian talent. So ultimately we have two things to focus on. One was digital and second was, digital we are good at.
I think our country talent is also very good at. So we have to derisk our drilling to some extent. And second is foreign collaboration.
Now, foreign collaboration is there are some niche companies and there are some IOCs. So naturally our focus is stretching some alliance. And you would notice that for even Western Offshore, our Bombay High, we stitched an alliance with one of the IOCs.
And similarly, now I'm going to drill a stratigraphy well next month. We have stitched an alliance for one well with some IOC. So basically this is the focus.
And also that India if at all finds, we believe that if India at all, we succeed in our exploration mission, it is going to be deep and ultra deep water.
Govindraj Ethiraj: So you talked about results not being satisfactory in terms of drilling output. Is that something that is linked to an India context or you're saying that the same effort could have produced oil elsewhere, all other factors being constant? So what happens that you have to stay the course.
Arun Kumar Singh: Like Guyana, the 47th well was discovery. And it's a large discovery. But what you do, you keep drilling and keep derisking.
So you keep moving in a direction where you know that now it is little derisk. So suppose you start with 100% risk. After drilling a well, you go to 90.
Now next well has 90% risk. So you keep derisking and keep reducing, reducing, reducing because you have digital data like seismic and all that. But then you chase the drilling and find where oil is because exactly there is a hypothesis and inference of seismic data.
So this is what always happens. One Guyana took 46, 47 wells. But we must move in the direction of derisking it.
And Bombay High would have been half of that? Bombay High is as good as Guyana because 1 billion barrel.
Govindraj Ethiraj: In terms of the time it took to find?
Arun Kumar Singh: Yeah, Bombay High we discovered in 1974. We have been chasing that field from 1960. So today, size of discovery wise, Bombay High was also around 10 billion barrel.
And as of now, Guyana is also 10 billion barrel. But Bombay we have produced a lot. So size wise, we can say that both are equal.
But every deep water exploration takes a lot of money. And also you need to be smarter. Smarter since you need to be very sure that now I am increasing my probability of success by drilling more number of wells.
Not the other way around that we are helter-skelter running and drilling left, right and centre.
Govindraj Ethiraj: And what's changed in the last year from a technology standpoint? So you talked about partnerships. Partnerships and partners obviously bring technology.
But what's changed in the oil and gas space? If so, that gives us hope that yes, thanks to technology, technology plus AI plus great talent, we can actually go find more oil than we thought there was.
Arun Kumar Singh: So all the IOCs basically are having in some high cost area, their probability of success is higher than us. So that is predicated on their better understanding of seismic data. Basically in seismic data, we look for contrast.
And contrast reading has improved considerably over a period of time because of technology improvement. In fact, that is one. And second is that today, tonnes and tonnes of data you collect when you do seismic.
So if you miss something there, you have missed. And it is all human mind which has to read that data. So technology is helping it in localising it well.
But beyond a point, again, you have to drill and test whether your hypothesis is correct or not. So it is a game of, you can say, improved technology, reprocessing. Many times reprocessing results in because with the improved technology and all that, we will get to a difference inference altogether.
So it is a game of both your past experience and your current technology.
Govindraj Ethiraj: So let's come back to India. So I was going to ask you about deep water drilling or ultra deep water drilling. So walk us through, let's say, what it takes to spend four or five times more than what you would traditionally.
Arun Kumar Singh: For our western offshore well is 50 crore. And the ultra deep water is 1000 crore. So it is 20 times.
So 20 times more costly. So risk size goes up. Therefore, you would recall that government has stepped in.
Honourable Prime Minister announced from the ramparts of Red Fort that the government will support Samudra Manthan. Samudra Manthan is nothing but all energy resources, whatever is possible from sea, that government will step in. The form, shape, size, how much, through whom.
Govindraj Ethiraj: These are the matter of detail, which I'm sure it will be forthcoming very shortly. And for, let's say, one particular well, I mean, is ONGC, I'm sure it's geared, but what has changed or what has to change within ONGC to align itself to two things. One is, of course, taking these bigger beds.
And secondly, plugging in the technology, which includes the AI and everything.
Arun Kumar Singh: So that part, ONGC is investing very heavily. In fact, thanks to our younger workforce, they seem to be knowing this world better. So we're betting high on them also.
And we have given them world's best class consultant to them, including hired data scientists, to see that we integrate everything that world knows today in the space of technology to ONGC. So that work is going on. We have devoted very large number of resources, if not, and best resources, basically, to do this work.
Govindraj Ethiraj: So we hope that our probability of success will improve. And would they be looking at old data and then trying to arrive at fresh conclusions or are they seeking new data? No, new data also.
Arun Kumar Singh: We are continuously doing more seismic. So seismic, we are doing 2D, 3D, we call it. That work is also going unabated because many of our deep and ultra-deep water is not well surveyed, seismic surveyed.
So that work also goes around well. In fact, you will be surprised that roughly we have been spending 4,000 crore per year on the data acquisition alone. So this is something that will continue.
And after we acquire data, we process data, we, what I told you, we increase the digital penetration of the data. And then we, you know, come to location where to drill.
Govindraj Ethiraj: Quality of data collection, if you were to compare it to, let's say, 10 years ago and 20 years ago, for someone who's trying to understand, I mean, how has it changed? It has improved a lot with the passage of time.
Arun Kumar Singh: You know, particularly the seismic acquisition in ultra-deep water is mostly foreigners. So they have been investing in it and therefore they have been good at it. They have improved a lot.
It is no more the, you know, older way of doing things. But still it is, ultimately you have to validate by drilling a well. You can't say from top that seismic, that, oh, there is oil.
So you have to prove it by drilling a well. If the probability of success is more than 14, 15%, we are home. For every seven, eight well, if we have a discovery, then it's fine.
But if you drill 20, 30 wells and 30 wells for a discovery, then naturally it is not fine because unless the pool is large, what you discover is a very huge pool because the size of economics will depend on the size of the pool.
—
Oil prices fell on Monday as civil unrest in Iran subsided, according to Reuters, and also the prospect that the likelihood of a US attack had reduced.
Brent crude was at about $63.79 on Monday, down 40 cents, while West Texas Intermediate was about $59.
Mutual Funds and Women
Back to mutual funds, there has been considerable shifts in the mutual fund investor base, including the manner in which women have become sole owners of their folios, as they're called. There are more than 258 million portfolios or mutual fund folios now, and the mutual fund market has grown in asset terms about 20% compounded annual growth rate in the last 10 years, so faster than deposit and many other asset classes. In a funny way, this is not lumpiness which has grown the industry, but mass retailization, according to Anuj Kumar, the managing director of CAMS, the infrastructure provider to mutual funds, which controls over 65% of that market.
In a conversation, I began by asking him to talk about what's changed in investor behaviour in this period and what lies ahead.
INTERVIEW TRANSCRIPT
Anuj Kumar: I think the primary metric is perhaps this 20% growth of assets, which hadn't happened in the past. When markets go down, so markets did go down about 15-16% in the last one and a half years, but even at the bottom of the market, there was reason for investors to pull out, but domestic investors did not pull out. You did not see months when either gross SIP count or SIP collection went south.
That did not happen. New SIPs continue to come in. So to that extent, I think, and a lot of these investors are millennials, some are actually even Gen Z because they're just getting in there, either in college or out of college, but I think their ability to rationalise the markets, basis the content that they consume and basis whatever they watch and consume is a lot better than people who are a generation ahead.
Govindraj Ethiraj: Yeah, and I've been told this by others as well, and that today's investors, for whatever reason, seem to be more calm and composed than previous generations. So do you have a demographic sense of who these people are and so on? I mean, or rather some more demographic sense?
Anuj Kumar: Yeah, so the industry splits this into what is called T30, which are the top 30 towns and beyond 30. The regulator themselves and the industry have been trying to push this product very strongly in B30, which means you go to the smaller town, go to hinterland and get all of this happening. So from a demographic perspective, from a population dispersion perspective, over 50% of new folios get formed from B30 towns, which is good news, which is a good penetration and distribution metric.
Women investors used to be small and women investor segment was just a surrogate of the head of the family who was just using her pan. She was not taking the decision. In the last about one and a half to two years, women investor participation has increased significantly.
I think in one year, women folios owned by women grew almost 30%. It's crossed the one crore mark now. The unique women investors has crossed the one crore mark and women are now taking decisions.
And similarly, a lot of the SIP and new folio creation is happening in the 25 to 35 age group and now also happening in the 18 to 25 age group. So I think broadly, you are earning a large amount of money and you are a big saver. Therefore, you invest.
That theory is being turned on its head and people are investing also their pocket money.
Govindraj Ethiraj: And all the time. So you said 10 million individual women investors. That's correct.
Of a total of? Of a total of about under 60 million. So 60 million equals 280 million folios.
That's correct. Right. So each person has about three schemes roughly on an average.
Yes. Okay. So if I were to look ahead and here's the sort of back to technology question again, what are your customers asking you for and what are the kind of challenges that they are giving you today to help them serve their customers better or differently in future as in in the near future?
Anuj Kumar: Multiple things. I will start with I would say deviant behaviour and fraud. So if I had you transacting from the city of Ludhiana and then you suddenly start transacting from Nasik, I should be able to spot and figure out that there's something going wrong and I should be able to spot that behaviour.
APIs. Because we power the entire mutual fund ecosystem. Everybody dislikes wait time.
So the behaviour of the API, the faster the data fetches, the speed at which the statement uploads, the speed at which you can upload a document, 10 minute KYC. All of these are time metrics. Can you do it as fast as the others?
The concept did not exist 10 years back, but it exists today. Analytics of various kinds. What are the pin codes?
What are the cities where investors live? What is the behaviour of various kinds of distributors? Are state capitals better, industrial towns better?
All of those analytics and consumer behaviour trends is something that we supply to the industry so that they can take better decision. So investors are managing their own portfolios. They're looking at their own reports.
Just on MyCamp, which is one of our utilities, we get five to six lakh unique logins every day. So people like to monitor. It's very easy.
You can do it on your phone.
Govindraj Ethiraj: It's also worrying in a way that people are checking mutual fund accounts every day, like they check stock prices several times in a day because it's just gratification to see your money having gone up.
Anuj Kumar: But I think the real proof of the pudding is in the eating event. I think the low complaint ratio, the almost absence of fraud, the pristeness of statements, record keeping, attribution of money.
