Latest news with #SwaminathanAiyar
Time of India
6 days ago
- Business
- Time of India
Is a market rally sustainable now and how soon will it see a correction? Sudip Bandyopadhyay explains
Sudip Bandyopadhyay , Group Chairman, Inditrade Capital , anticipates continued market volatility due to tariff uncertainties and geopolitical tensions , including the ongoing Ukraine-Russia war. Despite this volatility, the Indian market demonstrates resilience and a positive bias, fueled by consistent inflows from both global and domestic investors. This sustained inflow supports a generally optimistic outlook for the Indian market. The bulls are back. The market seems to be taking volatility in its stride, climbing the walls of worry since the past few days. Why are we seeing this kind of optimism on the street? Sudip Bandyopadhyay: A couple of things: One, the war cloud over West Asia dissipating was good news for the global equity markets and the positive mood which was prevailing in the world markets did percolate back to India as well. So, there was cheer all around. Of course, India gets more enthused when the oil prices start coming down and oil prices where they are is definitely good news for India. Apart from that, what acted in favour of Indian markets was that Thursday was the monthly F&O expiry day and that led to a lot of short covering in the markets. A cumulation of these factors – general positive sentiment prevailing all over, global oil prices coming down, rupee appreciating, and the short covering seen in the market led to the rally which took Nifty past 25,500. But the big question on everybody's mind is that will there be steam ahead for the bulls to surge and is this rally sustainable and how soon will the market see correction? Sudip Bandyopadhyay: Well, a couple of things I would like to point out very clearly. One, the global markets and Indian markets will continue to remain volatile. The volatility will stem from the tariff-related uncertainties and the future shenanigans around the tariff. We will also have a lot of tension on the geopolitical front. As you rightly pointed out, temporarily there is a ceasefire, and one cannot rule out a flare up once again. The Ukraine-Russia war is still continuing. There is a lot of stress in different parts of the world. So, yes, the volatility will be there and that volatility will affect global equity markets including India. So, we should be prepared for volatility. We should not assume that the market will be on an absolutely peaceful one-way trajectory. Live Events You Might Also Like: Overall situation rosier than expected; we are getting into peace, not war & India is in a sweet spot: Swaminathan Aiyar The second point is that, in spite of volatility, the way the markets have behaved over the last few months, there is a certain amount of resilience and a certain amount of positive bias for the Indian market. So, the mood is definitely positive. Whether we talk about the global investors or the domestic investors, their outlook on India continues to be positive. The flows into the market – be it domestic, mutual fund, or other funds, flow into the market on a continuous basis is significant and that to an extent is leading to this kind of inflow into the market which is sustaining a continuous positive bias for the markets. So, when you talk about these perceived volatilities that we will perhaps see because of the kind of tensions that may emanate out of the global geopolitical setup, but domestically one would believe that due to a good monsoon that could be in store for Indian companies, it is going to be a big positive factor and of course, the onset of the festive season is coming soon. What is your medium-term view in terms of the kind of moves that we are likely to see as far as the Indian markets are concerned? Are you comfortable with the valuations at present? Sudip Bandyopadhyay: A couple of points that you touched upon are very important. The domestic factors do look good. They are still not very good, but there are hopes of things improving. One is definitely a good monsoon will lead to significant upside in rural consumption which definitely corporate India needs. We will also see the spillover impact of that positive rural consumption on urban and semi-urban India, and this is absolutely critical for us. We are already seeing the capital expenditure promised by the government in the union budget getting implemented and that is absolutely good news. Corporate India has tightened belts. Cost efficiencies have increased significantly. So, we are all waiting for the quarterly numbers or the performance of the corporates to improve significantly from here on. Now, whether the improvement comes in Q2 or Q3, Q4 we will have to wait and watch and a lot of factors will determine that. The inflation is under control and that is leading to RBI being able to cut interest rates, that is good for growth and good for the corporate performance. You Might Also Like: Where should you pick stocks within strong structural trends? Dhiraj Agarwal explains So, overall, we think the groundwork which is being laid at this stage for corporate performance is very positive. Under these circumstances while the valuation even today does look a bit rich in multiple pockets, the opportunity of valuation or the corporate performance catching up with valuation in the near future is definitely there. Having said that, I will also say that the market works in the future. If there is an expectation of good numbers and good performance going forward, markets will start discounting that very-very soon. So, we have to remember that valuation always moves ahead of actual performance. There is nothing wrong with that. The next point I would like to mention is that there are still pockets in the Indian market where the valuation is attractive. So, if one is coming into the market, there are pockets, there are stocks, there are segments where even now buying looks attractive. As far as today's session is concerned, we did see some profit taking in defence stocks with BEL and Mazagon Dock and HAL, they fell in the range of 2% to 3%. Why do you think investors are not looking at defence with a long-term view? Sudip Bandyopadhyay: Investors always look at defence with a long-term view. I do not think there is any problem with that. When a war starts anywhere in the world and that gets wide publicity, defence stocks all over the world go up. And when the war ends, defence stocks correct to an extent. This is absolutely normal par for the course. So, we should not read too much into that. The moment this war flared up, whether it is the India-Pakistan skirmish or this West Asia conflict, defence stocks went up significantly from where they were and once the war stops, the stocks do correct. There is a saying that you buy defence stocks when there is peace and sell defence stocks when the war starts, that is how you should manage your portfolio for optimum returns.
Economic Times
7 days ago
- Business
- Economic Times
RBI can't be very aggressive in cutting rates if Fed is not doing so in USA: Swaminathan Aiyar
Swaminathan Aiyar, Consulting Editor, ET Now, says the Reserve Bank of India may cut interest rates, influenced by a potential US recession but the US Federal Reserve's stance on inflation and interest rates could limit RBI's actions. A significant gap between American and Indian interest rate trends may cause capital market movements. India has performed well with higher interest rates, so immediate cuts are not essential. Aiyar also thinks that RBI cannot become very aggressive in cutting interest rates if the Fed is not doing so in the USA. ADVERTISEMENT You are saying that the geopolitical situation is turning positive now and the equity markets are reacting the same way, a case in point being the Indian market. What is your current take on the market? How do you see the up move that we are witnessing right now? And yes, 9th July is going to be a critical day not just for the world but for the Indian markets as well. How are we heading towards that? Swaminathan Aiyar: As I said, that is one of the big things that we do not know about. If you get a return to that high Trumpian reciprocal tariffs, that will be a negative. But there are two things: Trump is negotiating very hard to try and get a number of results and he will certainly announce some results and say, victory. He loves to announce victory. So, a certain amount of tariff will be there. But as far as I can see, the European Union is in no hurry. They are saying no, no, we are not going to just give way. We are going to take our time. We are going to push our things and they are very much against import duties on steel, aluminium, and especially cars. Of course, there is an issue now which is going to be a big one – whether or not Europe can continue to tax what in India is called the Google tax, the practice of taxing of the biggest American MNCs on the basis of revenue and not profit because they are shifting the profit to offshore heavens. So, we will do it as a percentage of Google, so that is very much a thing coming up and the Europeans feel that this is one thing which can be used as a lever to get Mr Trump's tariffs down. Let us see if that happens and let us see how long that takes. The EU is prepared to fight well beyond the 90 days. India has been in a mood to give in. But as I have always said, India should also be fighting because I do not think these tariffs are going to hurting us so much. At the end of it all, while the United States is an important trading partner, if it goes down, there are ways around it. One thing that we have seen very clearly is that the international trading system has been extremely good that if there is a high tariff on one country, you send it out. God knows to which heaven on what kind of invoice, but you are ultimately able to export it to the USA or some other desired country through a third party. The world seems to have been extremely successful in that and let us see whether it is equally successful in the case of the reciprocal tariffs. When we interacted with you during the RBI rate cut recently, I remember your stance on liquidity. Now, we are hearing that the RBI is going to be holding a VRRR auction very soon. Is this a sign of a liquidity bubble because on one hand we have frontloading, and on the other hand, there is the VRRR auction? Swaminathan Aiyar: I will simply say that RBI either on the basis of instructions or on the basis of Mr Malhotra's mood, is in an interest rate cutting mode right now. You can certainly justify that if you think that there is a coming recession in the USA which will pull down the world economy. You can say that at the time when the world is going into an era of somewhat deficient demand, why not try and pick it up by having a more aggressive monetary policy in the sense of pushing rates down rather than pushing the rates up? Mr Powell in the USA is not so keen. Mr Powell is very clear that he sees significant chances of inflation coming out of Mr Trump's tariffs and therefore, there is a hold on interest rates there. We tend to pretend that we have an independent monetary policy and we can set interest rates, but at the end of the day, if there is too much of a gap between the American trend and the Indian trend, then that will lead to huge movements in the capital markets and then the RBI is likely to shift. So, let us see. ADVERTISEMENT If the Fed remains conservative on its interest rate now, that may act as a brake on Mr Malhotra's inclinations. It will be very interesting to look forward to. I would say that interest rates are not a critical part of whatever we are doing. India has been through relatively high interest rates for the last few years when we have done very well. So, it is not that India is unable to cope with high interest rates and they have to be brought down in a hurry. It is not essential. We have managed to do quite well. I have a feeling that Mr Malhotra or shall we say the RBI cannot become very aggressive in cutting interest rates if the Fed is not doing so in the USA. (You can now subscribe to our ETMarkets WhatsApp channel)
Time of India
25-06-2025
- Business
- Time of India
Overall situation rosier than expected; we are getting into peace, not war & India is in a sweet spot: Swaminathan Aiyar
Swaminathan Aiyar , Consulting Editor, ET Now , says geopolitical tensions are easing across several regions. There is de-escalation between Russia and Kyiv, and positive developments in Israel. India-Pakistan and Iraq-Iran relations are also showing signs of improvement. India's economic performance is exceptional. Optimism surrounds India's ability to exceed expectations this year. The overall outlook is surprisingly positive at this moment. Could it be long peace for the Middle East finally or is what we have seen in the last 24 hours is just posturing, nothing more and nothing less? Swaminathan Aiyar: I would say that what is happening is astonishingly positive. Just as we thought we are getting into a war, we are actually getting into a peace, and getting out of the war. We have an unusual situation now where there is in effect a ceasefire in Ukraine, Kyiv; a ceasefire is foreseen over Israel and Iran. The Americans have finished off the regime in Iran which seeks no immediate revenge. It wants to survive right now. We had an almost laughable situation where Iran said they will send some missiles to bomb American facilities in Qatar, but informed them in advance, so that everything would be safe and there would be no damage and no escalation. So, at this particular point, when people were worrying about World War III or a nuclear war, the attitude of the Iranian government was 'I just want to survive, I want to de-escalate at this point.' So, we have a situation which is very positive in terms of both Kyiv and what is happening in Israel. Peace is breaking out, in a sense, in both ways. So, a lot of the things that we are worrying about are giving way to pretty positive things as far as geopolitics is concerned. Far from being worst case scenarios, we are moving towards some pretty good case scenarios as far as the hostilities are concerned. And shall we say India-Pakistan also? So, India-Pakistan, Iraq-Iran, Russia- Kyiv, everything is settling down at this particular point. It is a very surprisingly positive outlook right now. Who will be the eventual winner of this entire so-called geopolitical adjustment? It looks like India is going to be the disproportionate beneficiary. We have stayed out of taking sides. We have had a huge victory when it comes to the India-Pakistan conflict. In terms of geopolitical tensions, it is the US versus China and Russia. India is neutral and the biggest beneficiary? Swaminathan Aiyar: India is in a sweet spot. It is more than that. If you look at the actual performance of the last two financial years, 2023-24 growth has been revised up to 9.2%. When that happened, a lot of people sneered and said this is because of an extremely extraordinarily low GDP deflator. But if that was the case, then we should have had just the other way around in 24-25 and therefore, 24-25 should have come down. So, the proper thing is to take the average of the two. If you take the average of those two years, it is 7.8%. It is nowhere near the 6.5% that Mr Anantha Nageswaran, Chief Economic Adviser, is aiming at. It is far above at a time when the overall global situation has been very tough. So, I can only say that it is not just India's prospects, India's actual performance in the last two years on the basis of the latest data, looks so exceptional that there is a case for optimism that this year too, we will exceed the kind of targets being put out. Live Events You Might Also Like: Consensus not confident on India's cyclical revival for next 2 years: Jigar Mistry On the other hand, the chance of a recession in the USA remains. The other thing that is happening is Mr Trump has persuaded or shall we say forced a new attitude in Europe. The European Union instead of saying we will spend 3% of GDP on defence, will have to aim at 5%. So, the cold war dividend is now gone and all these countries will be spending more on armament. There may be correspondingly less available for consumer demand to that extent and that could be a negative. These are the two medium-term negatives still out there. But overall, India has the capacity to look forward with some confidence that we have overcome extremely difficult situations. Will we be able to overcome the challenges of the coming short recession? Possibly. Will we be able to overcome this gradual fall in consumer demand that we are seeing? Yes. What will happen about Mr Trump's tariffs remains a question. The 90 days deadline for Trump tariffs is coming up. What happens after 90 days? Will the reciprocal tariffs come back? Will they go up? Will they go down? We have a new situation in the USA where some courts are beginning to take note of does Mr Trump have the right as president to declare that on the basis of national emergency, he is going to raise these tariffs across the board? One American court has ruled that while you can do specific things like raise tariffs on priority items like aluminium or steel, but to impose a 10% tariff across the board is not an emergency action. So, let us see what happens. The courts also may be able to stop some of the worst actions that Mr Trump has threatened on the tariff side. We are getting close to that 90-day deadline. Let us see. But as I said, the overall situation is looking much rosier than I would have said one month ago.
Time of India
10-06-2025
- Business
- Time of India
Tariff wars far from over, Trump likely to reuse trade lever, warns Swaminathan Aiyar
"The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out," says Swaminathan Aiyar , Consulting Editor , ET Now. Well, the official word so far is that US-China trade talks details were limited on Monday, I mean they are saying that US is willing to remove restrictions on some tech exports in exchange for China easing limits on rare earth shipments, but nothing has really happened. Is it going to be too hopeful or too optimistic to think that everything is going to be eased out on the sidelines of these London meetings? Swaminathan Aiyar: The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Kota: Here's How Much Dental Implants Really Cost In 2025 Dental implant | Search Ads Learn More Undo The Chinese stood up, when Trump increased the import by 125%, so did they and ultimately Trump had to back down on that and has backed down on various things. So, on the one hand this means that some kind of deals are definitely more possible. It also means that every country including India we have an incentive not to give way very easily. We have an incentive to say China stood up and it was rewarded. If all of us stand up, then we have this guy who from being a dragon now is beginning to chicken out on various deals, so let us talk tough, let us act tough. So that is the global position right now. For the very fact that the Americans say they are willing to ease the restrictions on high-end chips in return for the rare earths is a sign of chickening out in a big way. Let us see if that actually happens. As I said, we all have an incentive now to act tough because Mr Trump is very keen on reaching deals with the major countries before the 90-day deadline. Let us see what happens. As I said, I would look for last minute developments rather than anything right now despite the talks in London. Given with everything happening between US and China and within the US economy itself, you also have the matter of the rare earth metals that is looming on everybody's head and not only these two countries. Give us a sense of where India stands amid this storm. Do we stand to benefit from supply chains potentially shifting out of China and towards other EMs? And also, we understand that we do have enablers to manufacture our rare earths, but we are at a very nascent stage. So, what is your take on that as well? Swaminathan Aiyar: All across the world major countries have suddenly realised by God I am so dependent on China. It had not occurred to them in the days when globalisation was proceeding a pace, that you suddenly become so dependent on one single source. The United States has a bill of $39 million to promote its own supply chain of rare earths. We have begun, but it will take a long time and frankly we do not have very good domestic prospects. It will be more like trying to diversify our sources from other places. But the fact is that right now our auto industries and smartphone industries are both complaining that the supply chain is becoming very strained. Stocks of rare earths and permanent magnets are coming down to dangerous levels and if this does not reach some kind of quick conclusion, they may have to reduce production from June. Live Events India has made it very clear that Sino-Indian relations must not be mixed up with Sino-US relations. So, I mean that is one good thing. On the other hand, it also means while we do not have to worry as much about China hitting us as the US has, it also means we have less leverage to use the USA to get things done for us. So, let us see. China is keeping a very large number of countries on a tight leash to prove how strong position it is in and it knows very well that while all the other countries want to get other sources of supply, it is going to take some time and therefore China is going to have the upper hand in this deal not just in what happens in the next month or so but even in the next year, in the next two years. So, this is going to be an interesting Chinese lever that it may use again and again. As of now, let us see that 90-day deadline is approaching and let us see whether the USA and China manage to do a deal. Once that happens, there will be a lot of relief the world over and people saying okay things are not as bad as they are. The guy has chickened out once again, let us see. But things are really turning out to be bad between Elon Musk and Donald Trump, at least what their social media handles do suggest and finally that bromance seem to be coming to an end. But help us understand that what do you make out of that because some experts are even highlighting and anticipating that it is possible that both parties come along and once again join and shake hands. But what is your sense on that because for now in the latest commentary we see that Donald Trump calls Starlink a good service, but the tensions between both of them do remain. How do you see the landscape shaping up? Swaminathan Aiyar: At this point, Trump is very keen on doing deals within that 90-days, that is why people are accusing him of chickening out. From starting with a very-very tough stance, he has given way again and again. So, I would hope that a number of deals will be concluded within that 90-day deadline, but by no means all. I would also add that there is an incentive for every country like India to drag its feet. I mean, the key question is what will happen after the 90 days? Will Trump once again impose what he called those reciprocal tariffs of different rates from 26% to much-much higher rates all over the world. Is he going to reimpose them? As of now, that does not seem to be his intention. He keeps saying, I am hoping for deals. If those deals do not happen, are we going to see another phase of Trump saying now I am going to act tough because if you suddenly get reciprocal tariffs coming back after 90 days, then all this optimism that you are seeing in the markets right now, it will disappear like a whiff of smoke and all kinds of dire predictions will come again. So, we do not know what is going to happen. However, the longer-term prediction, I would say, please let nobody think that the 90 days is going to be the end. I think Mr Trump is going to continue to use the tariff lever for four full years. It is not over in 90 days. I do not think this is the end of the tariff thing. He is a believer in tariffs. He really thinks that tariffs are the solution and not a problem. And while in the short term he may say okay, I will chicken out here, I will chicken out there. The chicken will come back again and again and again. I do not think you are going to have any kind of safety or security in the next four years. So, in the long run, watch out. But what about the big beautiful breakup now between Musk and Trump? What are the implications of that? Swaminathan Aiyar: Well, I have to say that Mr Musk has been revealed as a greedy money grabbing guy. I mean, the thing he mainly disagrees with is among other things is that his own pocket is going to be burnt by some of the clauses in this bill. Some of the huge amount of subsidies that he has been getting, that some of the tax breaks that buyers of electric vehicles have been getting, if all that is taken away, it will hurt him very substantially. And people really think this is the big thing that is going behind. In any case, I do not think Mr Trump is famous for having permanent allies. I mean, even in the case of Iran, he turned around and said, we can do a deal with them and when people were astonished, he says we have no permanent enemies. In the case of Musk, he can also say we have no permanent friends. As long as, Mr Musk was willing to spend millions of dollars on helping Trump to get elected or as long as he was willing to ride on some of the slashing of expenditure, that part of the bandwagon, Trump was with him. The moment he got out of line, the moment that he ceased to be as important as he thought he was, he went into a sulk and Mr Musk is welcome to go into but Mr Trump is the guy who has the Trump cards. So, this was going to happen at some point of time and I would say that nobody should ever believe that Trump has permanent friends. If you look at his first term itself, many-many of the people he appointed to top posts were sacked and he has sacked people all over the place. In the TV programme called The Apprentice, his favourite line was you are fired. So, Mr Musk should not be surprised. What about India? We have got a great mix going on here. You have got lower inflation, now lower EMIs after the big bazooka from RBI , lower taxes back in the budget, and now good monsoons as well. You think it is a good mix for India markets to stay up? Swaminathan Aiyar: People are talking about the big bazooka and the big cut. To me this is a preparation for a possible recession. So, they are doing a counter cyclical thing now itself. Just a month ago I would say there were people rating chances of a recession extremely high. Now those chances may be a little less. But just wait for the end of the 90-day pause. Let us see what happens about this reciprocal tariff. Let us see how many trade deals are done because if it does not get done fairly quickly, we will indeed slip into a recession. From that point of view, Mr Malhotra can say, well, look I am taking advance action, I can see the possibility of a recession, so this is counter cyclical policy being taken at a very appropriate time, that I think will be his defence. There are some people accusing him of being too gung-ho. The Financial Times in London has said, hey, just take it easy, why are you cutting so badly after all you still have these problems and things are there. I agree we have our problems, but one of those problems is going to be a possible coming recession and as a counter cyclical thing against that recession, I think the RBI governor's aggression can be justified at this particular point. It is a bold move, but boldness might pay.
Economic Times
10-06-2025
- Business
- Economic Times
Tariff wars far from over, Trump likely to reuse trade lever, warns Swaminathan Aiyar
From that point of view, Mr Malhotra can say, well, look I am taking advance action, I can see the possibility of a recession, so this is counter cyclical policy being taken at a very appropriate time, that I think will be his defence. There are some people accusing him of being too gung-ho. "The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out," says Swaminathan Aiyar, Consulting Editor, ET Now. Well, the official word so far is that US-China trade talks details were limited on Monday, I mean they are saying that US is willing to remove restrictions on some tech exports in exchange for China easing limits on rare earth shipments, but nothing has really happened. Is it going to be too hopeful or too optimistic to think that everything is going to be eased out on the sidelines of these London meetings? Swaminathan Aiyar: The London meetings may not clinch it, but you have to see that there was a 90-day pause on April 2nd, that deadline is now not very far off and no big deals have been clinched by Mr Trump except with Britain. So, right now they are getting a little uneasy and willing to give way. Because of that in the USA, there is this new thing called taco, standing for Trump always chickens out. The Chinese stood up, when Trump increased the import by 125%, so did they and ultimately Trump had to back down on that and has backed down on various things. So, on the one hand this means that some kind of deals are definitely more possible. It also means that every country including India we have an incentive not to give way very easily. We have an incentive to say China stood up and it was rewarded. If all of us stand up, then we have this guy who from being a dragon now is beginning to chicken out on various deals, so let us talk tough, let us act tough. So that is the global position right now. For the very fact that the Americans say they are willing to ease the restrictions on high-end chips in return for the rare earths is a sign of chickening out in a big way. Let us see if that actually happens. As I said, we all have an incentive now to act tough because Mr Trump is very keen on reaching deals with the major countries before the 90-day deadline. Let us see what happens. As I said, I would look for last minute developments rather than anything right now despite the talks in London. Given with everything happening between US and China and within the US economy itself, you also have the matter of the rare earth metals that is looming on everybody's head and not only these two countries. Give us a sense of where India stands amid this storm. Do we stand to benefit from supply chains potentially shifting out of China and towards other EMs? And also, we understand that we do have enablers to manufacture our rare earths, but we are at a very nascent stage. So, what is your take on that as well? Swaminathan Aiyar: All across the world major countries have suddenly realised by God I am so dependent on China. It had not occurred to them in the days when globalisation was proceeding a pace, that you suddenly become so dependent on one single source. The United States has a bill of $39 million to promote its own supply chain of rare earths. We have begun, but it will take a long time and frankly we do not have very good domestic prospects. It will be more like trying to diversify our sources from other places. But the fact is that right now our auto industries and smartphone industries are both complaining that the supply chain is becoming very strained. Stocks of rare earths and permanent magnets are coming down to dangerous levels and if this does not reach some kind of quick conclusion, they may have to reduce production from June. India has made it very clear that Sino-Indian relations must not be mixed up with Sino-US relations. So, I mean that is one good thing. On the other hand, it also means while we do not have to worry as much about China hitting us as the US has, it also means we have less leverage to use the USA to get things done for us. So, let us see. China is keeping a very large number of countries on a tight leash to prove how strong position it is in and it knows very well that while all the other countries want to get other sources of supply, it is going to take some time and therefore China is going to have the upper hand in this deal not just in what happens in the next month or so but even in the next year, in the next two years. So, this is going to be an interesting Chinese lever that it may use again and again. As of now, let us see that 90-day deadline is approaching and let us see whether the USA and China manage to do a deal. Once that happens, there will be a lot of relief the world over and people saying okay things are not as bad as they are. The guy has chickened out once again, let us see. But things are really turning out to be bad between Elon Musk and Donald Trump, at least what their social media handles do suggest and finally that bromance seem to be coming to an end. But help us understand that what do you make out of that because some experts are even highlighting and anticipating that it is possible that both parties come along and once again join and shake hands. But what is your sense on that because for now in the latest commentary we see that Donald Trump calls Starlink a good service, but the tensions between both of them do remain. How do you see the landscape shaping up? Swaminathan Aiyar: At this point, Trump is very keen on doing deals within that 90-days, that is why people are accusing him of chickening out. From starting with a very-very tough stance, he has given way again and again. So, I would hope that a number of deals will be concluded within that 90-day deadline, but by no means all. I would also add that there is an incentive for every country like India to drag its feet. I mean, the key question is what will happen after the 90 days? Will Trump once again impose what he called those reciprocal tariffs of different rates from 26% to much-much higher rates all over the world. Is he going to reimpose them? As of now, that does not seem to be his intention. He keeps saying, I am hoping for deals. If those deals do not happen, are we going to see another phase of Trump saying now I am going to act tough because if you suddenly get reciprocal tariffs coming back after 90 days, then all this optimism that you are seeing in the markets right now, it will disappear like a whiff of smoke and all kinds of dire predictions will come again. So, we do not know what is going to happen. However, the longer-term prediction, I would say, please let nobody think that the 90 days is going to be the end. I think Mr Trump is going to continue to use the tariff lever for four full years. It is not over in 90 days. I do not think this is the end of the tariff thing. He is a believer in tariffs. He really thinks that tariffs are the solution and not a problem. And while in the short term he may say okay, I will chicken out here, I will chicken out there. The chicken will come back again and again and again. I do not think you are going to have any kind of safety or security in the next four years. So, in the long run, watch out. But what about the big beautiful breakup now between Musk and Trump? What are the implications of that? Swaminathan Aiyar: Well, I have to say that Mr Musk has been revealed as a greedy money grabbing guy. I mean, the thing he mainly disagrees with is among other things is that his own pocket is going to be burnt by some of the clauses in this bill. Some of the huge amount of subsidies that he has been getting, that some of the tax breaks that buyers of electric vehicles have been getting, if all that is taken away, it will hurt him very substantially. And people really think this is the big thing that is going behind. In any case, I do not think Mr Trump is famous for having permanent allies. I mean, even in the case of Iran, he turned around and said, we can do a deal with them and when people were astonished, he says we have no permanent enemies. In the case of Musk, he can also say we have no permanent friends. As long as, Mr Musk was willing to spend millions of dollars on helping Trump to get elected or as long as he was willing to ride on some of the slashing of expenditure, that part of the bandwagon, Trump was with him. The moment he got out of line, the moment that he ceased to be as important as he thought he was, he went into a sulk and Mr Musk is welcome to go into but Mr Trump is the guy who has the Trump cards. So, this was going to happen at some point of time and I would say that nobody should ever believe that Trump has permanent friends. If you look at his first term itself, many-many of the people he appointed to top posts were sacked and he has sacked people all over the place. In the TV programme called The Apprentice, his favourite line was you are fired. So, Mr Musk should not be surprised. What about India? We have got a great mix going on here. You have got lower inflation, now lower EMIs after the big bazooka from RBI, lower taxes back in the budget, and now good monsoons as well. You think it is a good mix for India markets to stay up? Swaminathan Aiyar: People are talking about the big bazooka and the big cut. To me this is a preparation for a possible recession. So, they are doing a counter cyclical thing now itself. Just a month ago I would say there were people rating chances of a recession extremely high. Now those chances may be a little less. But just wait for the end of the 90-day pause. Let us see what happens about this reciprocal tariff. Let us see how many trade deals are done because if it does not get done fairly quickly, we will indeed slip into a recession. From that point of view, Mr Malhotra can say, well, look I am taking advance action, I can see the possibility of a recession, so this is counter cyclical policy being taken at a very appropriate time, that I think will be his defence. There are some people accusing him of being too gung-ho. The Financial Times in London has said, hey, just take it easy, why are you cutting so badly after all you still have these problems and things are there. I agree we have our problems, but one of those problems is going to be a possible coming recession and as a counter cyclical thing against that recession, I think the RBI governor's aggression can be justified at this particular point. It is a bold move, but boldness might pay.
