Indian Equities' Moment in Sun Faces Growing Headwinds
A sharply rising trend in India's share markets is encountering resistance from multiple fronts, prompting increasing scrutiny over its sustainability. Benchmark indices have enjoyed roughly a 14 per cent rally over the past six months, invigorating initial public offerings and share sales. Yet, foreign investors have been net sellers to the tune of US$10 billion this year, triggering alarm among market watchers.
The spike in corporate fundraising—from HDB Financial Services and others—has elevated supply to near record levels, raising the prospect of a correction should demand fail to keep pace. With IPOs totalling around US$1.75 billion launching this week and dozens more awaiting approval, promoters are cashing out aggressively. Companies such as British American Tobacco and Reliance Industries have conducted substantial secondary offerings, exacerbating the supply pressure.
Foreign institutional investors have pulled capital at a faster clip. Already offloaded nearly US$29 billion from Indian equities since October as they pivoted to China in search of stimulus-led returns. Over the January–March period, FPIs unwound ₹61,000 crore from the Indian market amid global headwinds, while June saw ₹8,749 crore in fresh outflows on escalating US–China trade friction and rising yields abroad.
ADVERTISEMENT
The domestic funding round is proving insufficient to fill the gap. Domestic mutual fund inflows recorded a 13‑month low, signalling wavering local investor sentiment. The result: valuations are increasingly stretched, and analysts caution that the market may be overextending.
Oil price volatility adds another layer of risk. India's dependence on imported crude leaves its markets vulnerable to geopolitical flare-ups. Experts warn that if Brent crude surpasses US$80 per barrel due to conflict in West Asia, inflation could spike and equity valuations may come under renewed selling pressure.
Offsetting these challenges are encouraging technical patterns. The market has recently broken out of a five‑week consolidation phase, with key indices like the Nifty approaching the 26,000 mark. Renewed investor interest in metals and chart‐based breakout signals have sparked fresh optimism. Improved global sentiment—including a cooling of trade tensions and reported progress in US–China negotiations—may underpin further gains if inflows resume.
Still, some analysts remain unconvinced of a robust economic shift. Growth indicators have softened and wage pressures remain muted. India's cyclical revival is far from assured, with consensus calling for cautious optimism over the next 18–24 months. Delays in domestic reforms or widening global pressures could blunt momentum.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The National
38 minutes ago
- The National
Has the oil and gas industry learnt the right lessons from the Israel-Iran conflict?
Open fighting between Israel and Iran, and missile and drone strikes on oil and gas facilities would once have triggered crisis in energy markets. Yet after the 12-day war between Israel and Iran, joined by the US, oil prices are lower than when it started. Has the oil and gas industry learnt lessons from this brief conflict? More importantly, has it learnt the right lessons? First, the market is not worried about disruption to energy supplies from the Gulf. Despite two of the Middle East's key military and political powers lobbing missiles at each other, despite the US directly bombing Iran for the first time ever and Tehran also countering for the first time by attacking the territory of a Gulf state, oil prices are lower now than before the conflict broke out. After a brief 20 per cent rise, gas prices in Europe have also dropped to below their pre-June 12 levels, even though the continent needs Gulf liquefied natural gas (LNG) to make up for the loss of Russian imports. Following much more nervous periods in the early 2000s, when a whiff of gunpowder could put $10 on the oil price, four factors are at play. The rise of the US's shale oil and gas output has diversified supplies, and it could increase output further in the case of a prolonged disruption and price spike. Opec members hold major spare capacity in Saudi Arabia, the UAE and Iraq, while Iran's own output has stagnated. Saudi Arabia and the UAE have built or expanded pipelines that bypass the Strait of Hormuz. And the world economy is less oil-dependent – a barrel of oil generates $2,500 of world gross domestic product today, up from $1,725 in 2000. Renewable energy and electric vehicles are now genuine alternatives at commercial scale to oil and gas. But perhaps all these factors are secondary to the fable of the 'boy who cried wolf'. Iranian politicos and military officials have often threatened to 'close the Strait of Hormuz' at times of geopolitical tension and analysts have studied the possible threats, implications and countermeasures to exhaustion. Yet nothing has happened, beyond in the past few years some minor and deniable explosions, and harassment of vessels by Iranian naval forces. This time, there was not even that, just some spoofing of GPS signals. Iran depends on the strait itself; interrupting transit would cut off its own exports and imports, and invite devastating retaliation. It is only likely to be attempted if the regime in Tehran has its back to the wall. Of course, the fighting had some impacts on specific parts of the energy business, sharply pushing up diesel and jet fuel prices, tanker hire rates and insurance. But overall, the oil market appears to have decided that it will wait to see real physical disruption or destruction before reacting dramatically. Second, there is still restraint in targeting energy sites. Probably not wanting to be blamed for causing a global energy crisis, Israel did not attack Iran's oil export capacities. Its strikes against domestic oil depots and gas processing plants appear more in the nature of a warning and have not caused long-lasting disruption. Iranian missiles did damage facilities at the Bazan plant in Haifa, one of Israel's two oil refineries. But Israel's three offshore gasfields have avoided damage, even though since October 2023, they have seemed like obvious, critical and hard-to-defend targets for missiles or drones from Iran or its allies, notably Hezbollah. Third, the Gulf countries' outreach to Iran, and the assistance of China in mediating the Saudi-Iran normalisation of March 2023, has been helpful in keeping them out of conflict. Doha was certainly not happy to have Iranian missiles targeted at the US's Al Udeid base on its soil, but no serious damage was done and the Iranians were quick to make it clear that the nation of Qatar was not their target. But what if these lessons are false? Or, at least, not teaching us what we think? Complacency in such critical matters could be catastrophic. Restraint tends to fall away as conflicts draw on. Weapons are used with greater ingenuity and desperation. Ukraine has showed that well with its increasingly sophisticated penetration of Russian defences, its strikes against oil refineries, key bridges and rail lines, and bomber bases. Iran and, before it, Hezbollah were taken aback by the elimination of so many key commanders early in the conflict. That may have limited their ability to execute more damaging retaliation this time. Aerial and maritime drones give capacity for much more precise strikes than were possible in previous periods of panic in the early 2000s. Israel and the US have given mixed messages on whether their goal was the elimination or setback of Iran's nuclear programme, or regime change. If the Islamic Republic were seriously in danger of destruction, though, it would become far more likely to use whatever remaining leverage over world energy supplies it had. The boy who cried wolf, of course, was eventually eaten by a wolf. The region and the key external players need to move beyond fragile ceasefires, containment and the rule of the gun, to multilateral peacebuilding In some ways, the global energy system is more robust than in the early 2000s. In others, it has become more vulnerable – because of the loss of Russian gas to Europe, the much greater reliance globally on Gulf LNG, and the disruption of shipping through the southern Red Sea. As former Egyptian president Anwar Sadat used to say, 'the US holds 99 per cent of the cards in the Middle East'. It may not be so high these days, and Sadat himself admitted in private, 'The United States actually holds only 60 per cent'. But neither of Iran's backers, China or Russia, seem to hold even 10 per cent, nor were of any obvious use in halting the Israeli or American attacks. Concern for what Beijing thinks might hold back Tehran from attacking its Gulf neighbours, but the fear of US retaliation remains a bigger restraining factor. We have, so far, got away with an exceptionally dangerous situation. The solutions are threefold. First, regional states including the Gulf should continue building energy security and resilience, including better defences, and diversified infrastructure. Second, energy importers should accelerate their efforts on non-petroleum technologies, bringing environmental as well as security gains. Third, the region and the key external players need to move beyond fragile ceasefires, containment and the rule of the gun, to multilateral peacebuilding.
Gulf Today
10 hours ago
- Gulf Today
Trump betrayed the diplomatic effort, says Iranian FM
Tehran: Iranian Foreign Minister Abbas Araghchi has dismissed US President Donald Trump's declaration that their countries would re-engage in nuclear negotiations in the coming week. 'If our interests require a return to negotiations, we will consider it. But at this time, no agreement or promise has been made, and no talks have taken place.' Araghchi made the point that they were negotiating when Israel launched its June 13th unprovoked attack on Iran. Trump followed up last weekend by striking three Iranian nuclear sites with bunker buster bombs with the intention of finishing off Iran's nuclear programme. Araghchi accused Trump of betraying the diplomatic effort to resolve differences. While Trump claimed the US had "obliterated" Iran's main nuclear sites, International Atomic Energy Agency (IAEA) chief Rafael Grossi said the sites had been seriously damaged but suggested that Iran should be able to enrich uranium "in a matter of months." According to CNN, the Trump administration could encourage Iran to resume talks by offering $20-30 billion to establish a civilian nuclear energy programme without Iranian enrichment of its own nuclear fuel. The finance, it is said, could be provided by the Gulf countries, naturally not the US. The administration would also ease sanctions and unfreeze Iranian assets in foreign banks. While such a speculative deal has been deliberately leaked and widely reported, it is unlikely to materialise. It looks like "pie in the sky," as the saying goes. Tehran is unlikely to reject a return to talks, but Iran is still assessing its military, political, and diplomatic losses from Israel's 12-day war and US strikes on its nuclear sites. Iran has to lay down its own conditions and decide when the atmosphere is propitious before re-engaging. Iran has laid down two red lines: low level uranium enrichment must continue on Iranian soil and Iran will not discuss its ballistic missile programme which Iran argues is essential for self-defence. Trump seeks to cross these red lines by eliminating both domestic enrichment and missiles. Trust has not characterised Iranian-US relations since Ayatollah Ruhollah Khomeini over-threw Washington's ally Shah Mohammed Reza Pahlavi in early 1979 and, radical "students" seized control of the US embassy in Tehran and held staff for 444 days. They were not freed until Ronald Regan had taken over the US presidency from Jimmy Carter. Unfortunately, this gesture did not clear the way for the restoration of relations due to US rejectionism. The blow of losing the Shah, compounded by the humiliation of the embassy occupation made the US, particularly Congress, testy and unforgiving and easily influenced by domestic and Israeli anti-Iran hawks. Iranian popular trust in the US was undermined during the decades-long the rule of the shah who developed Iran's economy and carried out modernising social reforms but ruled with an iron fist. His tool was his intelligence agency Savak which allied with the US Central Intelligence Agency and Israel's Mossad. The shah put Iran firmly in the Western camp during the Cold War with the Soviet Union and adopted pro-Israel policies. Iranian resentment continues over the 1953 US-British coup against popularly elected Prime Minister Mossadegh who nationalised the Anglo-Iranian oil company. Resentment intensified when in 1954, the shah reached a deal giving Western countries control of Iran's oil industry. He also allowed US companies to play a dominant role in trade and Iran's domestic markets. This was exploited by the Iranian opposition, especially Khomeini who mounted his "revolution" from exile in France. He returned to Tehran in early 1979 after the shah had fled to the US. After several years of turmoil, Khomeini installed the cleric-dominated model of governance A decade after the fall of Shah, Iran's President Hashemi Rafsanjani (1989-1997) tried and failed to reconcile with the US and the West. He was followed by Mohammed Khatami (1997-2005) who in 1999 launched his "Dialogue of Civilisations" which he hoped would achieve this end. One effort in this campaign was a Cyprus conference attended by US scholars, policy makers, influential Iranians, and foreign correspondents. While Khatami's call for dialogue failed to change Washington, one result of this conference was the creation of the website Gulf 2000 which continues to provide platform for information and comment on Iran, the Gulf and the region. Khatami was succeeded by erratic hardliner Mahmoud Ahmadinejad (2005-2013). His hostile attitude toward the US and the West gave a boost to the powerful anti-Iran lobby in Washington, which was heavily influenced by Israeli Prime Minister Binyamin Netanyahu who had tried for three decades to drag the US into a war with Iran. The landmark 2015 agreement limiting Iran's nuclear programme in exchange for lifting sanctions was negotiated during the presidency of reformist Hassan Rouhani (2013-2021). Iran carried out its commitments under the Obama administration deal and secured some relief from sanctions which had crippled its economy. At that time, IAEA chief Grossi said Iran's nuclear programme was "primitive." The deal restricted enrichment to 3.67 per cent for civilian power plants, reduced its stockpile, compelled Iran to export enriched uranium above the limit, and compelled Iran to use old model centrifuges for enrichment. Iran was subjected to the most stringent and invasive regime of monitoring and inspections ever imposed on any country. However, in 2018, Trump aborted the deal and proclaimed1,500 sanctions, disrupting the process of reconstituting US-Iran relations. Iran responded in 2019 by enriching uranium to 20 and 60 per cent, amassing a large stockpile, building advanced centrifuges, and curbing IAEA monitoring, Hardliners in the Iranian clerical establishment engineered the 2021 election of Ebrahim Raisi who reverted to an anti-US stance until he died in a helicopter crash in 2024. Iran again swung to the reformist faction by electing Masoud Pezeshkian as president who had pledged to clinch a new nuclear agreement. Having failed to restore relations with the US, which remains Iran's chief antagonist on the global scene, Tehran has cultivated ties within the region. This process was expanded by the 2023 restoration of Saudi Iranian relations and promised the stability Gulf countries require to pursue economic and social advancement. This has been jeopardised by Israel's war on Iran and US military and political intervention.
Gulf Today
10 hours ago
- Gulf Today
Tourists are trickling into Afghanistan and Taliban government is eager to welcome them
By plane, motorbike, camper van and even on bicycles, tourists are beginning to discover Afghanistan, with solo travelers and tour groups gradually venturing into a country that until recently was wracked by war. And the country's Taliban government, which seized power more than three years ago but has yet to be formally recognised by any other nation, is more than happy to welcome them. "The Afghan people are warm and welcoming and wish to host tourists from other countries and engage with them,' Deputy Minister of Tourism Qudratullah Jamal told The Associated Press in an early June interview. "Tourism brings many benefits to a country. We have considered those benefits and aim for our nation to take full advantage of them.' Tourism is a vital, multi-billion-dollar industry for many countries. Deputy Minister of Tourism Qudratullah Jamal speaks with the Associated Press in Kabul. AP Afghanistan's isolation on the international stage, largely because of the Taliban's restrictions on women and girls, has left much of its 41 million people mired in poverty. As it struggles to attract foreign investment, the lucrative potential of tourism is far from lost on the government. "We are currently earning a considerable amount of revenue from this industry, and we are hopeful it will grow even more in the future,' Jamal said, noting money spent by visitors can reach more layers of society than revenue from other industries. "We are optimistic this sector will evolve into a large economy, bringing significant benefits. It plays an important role in strengthening our national economy.' Tourist visas are quick and easy to obtain and flights from major transit hubs such as Dubai and Istanbul operate several times a week. The government has even set up a training institute for men — and it is only for men — seeking jobs in the hospitality and tourism sector. Villagers walk in the fields near the niche of the giant Buddha statue destroyed by the Taliban in 2001, in Bamiyan, Afghanistan. AP While visitor numbers are still very much a trickle rather than a flood, they are increasing. Nearly 9,000 foreign tourists visited Afghanistan last year, while nearly 3,000 people visited in the first three months of this year, Jamal said. Four decades of near-continuous conflict kept nearly all vacationers away from this landlocked country of towering mountains, deep gorges and millennia of history. The Taliban's takeover from a US-backed government in August 2021 stunned the world and sent thousands of Afghans fleeing. But with the insurgency over, the bloodshed from frequent bombings and suicide attacks all but ended too. Attacks still occur, however. A Daesh affiliate in Afghanistan remains active and gunmen killed six people, including three Spanish tourists, in a May 2024 attack in Bamiyan, one of the country's main tourist attractions where centuries-old giant Buddhas carved into the cliffs were blown up by the Taliban in 2001. Band-e-Amir National Park, with its stunning blue lakes and towering cliffs, is seen in Afghanistan's central Bamiyan province. AP While Western countries still advise against travel to Afghanistan, a drop in violence from the two decades of US-led military presence is indisputable, as the government is keen to point out. "Afghanistan has gone through many years of war and hardship. Now, we want tourists to come and see the true traditions and customs of Afghans, to understand Afghan life, creativity and resilience,' Jamal said, noting there was "comprehensive security across Afghanistan.' Critics question the ethics of foreigners visiting Afghanistan for pleasure when its government discriminates so heavily against half the country's population. Education beyond primary school level is banned for girls and women and few professions are open to them. Women cannot enter parks, gardens or gyms. Beauty salons are forbidden. Authorities dictate how women dress and have demanded they cover their faces in public, a decree still flouted by many, particularly in Kabul. Some visitors say they contemplated the ethics, but ultimately wanted to see the situation for themselves. French-Peruvian Illary Gomez said she and her British partner, James Liddiard, debated for about a year whether to drive through Afghanistan as part of their U.K.-to-Japan camper van journey. "Some things didn't feel morally right,' she said. But once here, they said they found a warm, hospitable and welcoming people and beautiful landscapes. They didn't feel their presence was any form of support for the Taliban. By travelling, "you put money in the hands of the people, not the government,' Liddiard said. The treatment of women is particularly sensitive for government officials. Jamal declined to comment on the subject beyond saying male and female visitors were welcome. "Those who respect our laws and traditions have already come and can continue to come,' he said. While most restrictions are strictly enforced on Afghan women, they are far more relaxed for foreigners. Although they must still wear a headscarf in public, foreign women are more likely to gain entry into some restricted areas such as parks and are rarely asked to cover their faces in public. Opening the country to foreign visitors was also a way of building bridges, Jamal said. "It is a great way to promote interaction between the people of different countries. It helps build international relations and is also beneficial for trade,' he told the AP. "When foreigners come here, Afghans also learn a lot from them. In addition to expanding commerce, tourism also helps foster mutual understanding, cultural exchange and strengthens talents as people learn from one another.' A foreign traveler seeing the country with his own eyes "creates closeness, builds connections and fosters trust among people,' Jamal said. "They will respect each other's culture and the distance between peoples will diminish. "So this is not just economic development; it also brings spiritual and political benefits,' he said. Associated Press
