India emerging as a pharma hub holds promise:, says DHL Express SVP, South Asia
'International trade patterns are changing all the time. In the last year or two, especially post-Covid, all the global manufacturing and brand players have been focusing on supply chain resilience and not being dependent on single-origin manufacturing'
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RTÉ News
44 minutes ago
- RTÉ News
World economy faces 'pivotal moment', central bank body BIS says
Trade tensions and fractious geopolitics risk exposing deep fault lines in the global financial system, central bank umbrella body the Bank for International Settlements, said in its latest assessment of the state of the world economy. Outgoing head of the BIS, often dubbed the central bankers' central bank, Agustín Carstens, said the US-driven trade war and other policy shifts were fraying the long-established economic order. He said the global economy was at a "pivotal moment", entering a "new era of heightened uncertainty and unpredictability", which was testing public trust in institutions, including central banks. The bank's report is published just over a week before US President Donald Trump's trade tariff deadline of July 9 and comes after six months of intense geopolitical upheaval. When asked about Trump's criticisms of US Federal Reserve Jerome Powell, which have included Trump labelling the Fed chair as "stupid", he was not overly critical. "It is to be expected at certain points in time that there will be friction," former Mexican central bank governor Carstens told reporters, referring to the relationship between governments and central banks. "It is almost by design". The BIS' annual report, published yesterday, is viewed as an important gauge of central bankers' thinking given the Switzerland-based forum's regular meetings of top policymakers. Rising protectionism and trade fragmentation were "particular concerning" as they were exacerbating the already decades-long decline in economic and productivity growth, Carstens said. There is also evidence that the world economy is becoming less resilient to shocks, with population ageing, climate change, geopolitics and supply chain issues all contributing to a more volatile environment. The post-Covid spike in inflation seems to have had a lasting impact on the public's perception about price moves too, a study in the report showed. High and rising public debt levels are increasing the financial system's vulnerability to interest rates and reducing governments' ability to spend their way out of crises. Wall Street extended its rally on Friday, sending the S&P 500 and Nasdaq to all-time closing highs - with each adding 0.5% - while the Dow climbed 1% higher. "This trend cannot continue," Carstens said referring to the rising debt levels and he said that higher military spending could push the debt up further. Hyun Song Shin, the BIS's main economic adviser, also flagged the sharp fall in the dollar. It is down 10% since the start of the year and on track to be its biggest half yearly drop since the free-floating exchange rate era began in the early 1970s. He said there was no evidence that this was the start of a "great rotation" away from US assets as some economists have suggested, but acknowledged that it was still too early to know given sovereign funds and central banks move slowly. Shorter-term analysis, though, showed "hedging" by non-U.S. investors holding Treasuries and other US assets appears to have made an "important contribution" to the dollar's slide over the last few months. "We haven't seen anything (yet) that would give us any cause for alarm," Shin added. The BIS had already published one part of its report last week that gave a stark warning about the rapid rise of so-called stablecoins. In terms of the BIS' own finances, it said it made a net profit of $1.2 billion, while its total comprehensive income reached a record high of $5.3 billion and currency deposits at the bank also reached a new high.
Mint
3 hours ago
- Mint
India Inc's strong start to FY26 faces reality check on earnings breadth, valuations
India Inc has started FY26 on stronger footing, with April-June performance expected to outpace the same quarter last year. Analysts attribute this to a favourable base, continuing recovery in rural demand, and a timely monsoon—but warn that the improvement may not translate into broad-based earnings momentum just yet. Domestic demand-driven sectors are expected to carry much of the weight in a quarter marred by external shocks, including US tariff threats, geopolitical tensions in West Asia, and heightened cross-border strain following the 22 April Pahalgam terror attack and India's subsequent Operation Sindoor in May, which targeted terrorist camps in Pakistan and Pakistan-occupied Kashmir. 'Rate sensitive sectors like banks, NBFCs (non-banking financial companies), select auto [companies] and realty are likely to benefit," said VK Vijayakumar, chief investment strategist at Geojit Investments. 'Aviation, telecom and hotels will continue to do well, while IT will remain a drag on earnings." Jay Kothari, lead market strategist at DSP Mutual Fund, finds oil marketing companies (OMCs) and gas distributors tactically attractive. 'Lower energy costs should improve [OMCs'] marketing margins in Q1, while export-linked sectors like IT, pharma and textiles may face near-term earnings headwinds," he said. Even so, analysts expect gains to remain concentrated in pockets, with some sectors continuing to lag and rich valuations limiting market-wide upside. Earnings growth faces structural constraints India's post-pandemic bull run has yet to coalesce around a defining macro theme. Unlike the capex-led cycle of the 2000s or the consumption surge of the 2010s, recent gains have been driven more by margin expansion than robust demand growth. 'I'm cautiously optimistic that the earnings cycle has sort of bottomed out and we could be looking at 12–14% [Nifty] earnings growth in FY26," said Manish Jain, head of fund management at Centrum Broking. 'But I don't expect any dramatic changes in Q1 compared to Q4." In Q4FY25, corporate India's earnings per share (EPS) rose 10-12%, but full-year earnings growth came in below 5%. Moreover, earnings downgrades continued to outpace upgrades, indicating that analysts are tempering their expectations heading into the new fiscal year. A recent report from Nuvama Institutional Equities notes that the margin expansion story may be nearing its limits. Corporate restructuring has largely run its course, and premiumization trends are beginning to normalize across sectors. This has led India Inc.'s profit growth to slow and align more closely with revenue growth, which remained sluggish in FY25. In fact, India's revenue growth has trailed other emerging markets (EMs) post-Covid, averaging below 10% for eight consecutive quarters, according to Nuvama. As India's earnings differential narrows with other EMs, the risk of foreign institutional outflows increases, the report warned. Despite this, the market still expects mid-teens EPS growth over the next two years, forecasting continued expansion in both margins and topline. If these expectations aren't met, the gap between actual and projected earnings could lead to more sustained earnings downgrades, according to the report. Domestic consumption: A swing factor While India's economy has demonstrated resilience to external shocks in recent quarters, high-frequency indicators suggest that a secular pickup in consumption remains out of reach. Economists expect GDP growth to moderate to 6.5% in Q1FY26, down from 7.4% in Q4 FY25. That jump in Q4 was partly supported by a sharp 41% on-year drop in government subsidy payouts, which helped lift the headline GDP. Gross value added (GVA), a cleaner measure of underlying activity, rose 6.8%, revealing weaker momentum. Private consumption, which made up 56.5% of GDP in FY25 according to CMIE data, continued to lag. Urban demand remains inconsistent, with household consumption slowing in Q4 from Q3. Much of the hope for a broader uptick now rests on rural demand. Radhika Rao, senior economist and executive director at DBS Bank, noted that falling inflation should improve household finances and support private consumption in the coming quarters. Rural households are likely to benefit more from better crop yields due to a timely monsoon, she said. 'Following a strong Q4 our proxy gauge for rural demand has held up into April as well. Volume growth appears stronger in non-food categories," Rao added. Manish Jain of Centrum Broking expects consumer durables, NBFCs, and select auto companies to benefit from the rural recovery theme. Debopam Chaudhuri, chief economist at Piramal Group, also sees signs of revival in budget-focused segments. 'I remain optimistic about a broader demand revival as the 2025 festive season approaches," he said. Valuations leave little room for error Even as near-term demand trends show improvement, markets are pricing in a strong recovery. Yet, sector leadership has remained fluid, with most themes—from manufacturing to consumption to digital, having already enjoyed their spotlight post-Covid. According to Nuvama, five-year compound annual growth rates for all sectors now range between 10–30%, leaving little that looks fundamentally cheap. 'I don't think the flavour of the market is going to change a whole lot from what we have seen in the last five years," said Jain. 'One has to be very sharp and nimble to keep pace with the sector rotations in large caps. With small and mid-caps, it is always a growth-driven bottom-up approach."
Deccan Herald
13 hours ago
- Deccan Herald
India emerging as a pharma hub holds promise:, says DHL Express SVP, South Asia
'International trade patterns are changing all the time. In the last year or two, especially post-Covid, all the global manufacturing and brand players have been focusing on supply chain resilience and not being dependent on single-origin manufacturing'
