This text is an on-site version of the India Business Briefing newsletter. To receive it in your inbox usually, join should you’re a premium subscriber, or upgrade your subscription here.
Good morning. Just a few weeks ago I read a thread on X by someone who was complaining about going abroad on a vacation and running into too many fellow Indians there. I discovered his anguish comical, but there is no such thing as a denying that we’re holidaying overseas as if our lives rely on it. And IndiGo is hoping to money in on this by expanding its footprint (wingspan?) abroad. But first, why has the stock market taken a flight south?
Low stock
Indian equities have been sliding downward for several weeks, with some indices now entering bear market territory. The 30-stock benchmark BSE Sensex has been trading around 76,000, down around 7.5 per cent since mid-December and nearly 10,000 points from its all-time high of 85,978 in September 2024. Small- and medium-cap stocks have taken the most important beating: the BSE SmallCap index is down 21 per cent from its highs and the BSE 150 MidCap 150 is down 19 per cent. I could quote more figures for example the trend, but you get the image, so let’s take a look at what’s causing this slide and what the longer term holds.
Foreign portfolio investors have largely been pulling money out of India since September last yr and that trend continues. In January, they withdrew Rs780bn ($9bn) from India and, to date in February, they’ve taken out one other Rs212bn. India’s loss is China’s gain, with foreign investors getting in on a market upswing there, especially in technology stocks, after the large reveal of homegrown Chinese generative AI product DeepSeek.
Prior to now few years in India, we have now tended to think that since we have now strong domestic participation within the markets, we needn’t worry about foreign money. It’s true that the introduction of standard monthly investing using “systematic investment products” offered by mutual fund houses has funnelled so much more household savings into equity markets. But large withdrawals by foreign investors proceed to be significant market movers. The opposite think about the expansion of domestic investments is direct trading by retail investors who “discovered” stocks as a possible income stream in the course of the coronavirus pandemic. That is the primary market downturn these recent, and mostly young, investors have witnessed and current losses are more likely to have a snowball effect.
So what’s the outlook? In my conversations with fund managers and institutional investors, the overwhelming sense I gleaned was that there are not any triggers within the immediate future more likely to significantly alter the trend. The predictable big events (budget, rate of interest cut) are behind us. Indian stocks are overvalued, even at current levels. There is huge uncertainty world wide — with Trump shaking things up economically (tariffs) and politically (Gaza, Ukraine). Things are more likely to worsen before they recuperate. As all the time, at the person stock level, there are profits to be made. But, without some sudden positive developments, the overarching narrative is more likely to proceed to be negative for a couple of more months.
What’s your outlook for the Indian stock market? Hit reply or email us at indiabrief@ft.com.
Beneficial stories
Europe is scrambling to reply, with an emergency meeting in France, because the US and Russia prepare for Ukraine peace talks. On Sunday, the UK’s prime minister offered ground troops. And Ukraine rejected Donald Trump’s bid for rights to half of Ukraine’s mineral reserves.
Forget the US dollar, gold is the last word Trump trade.
China’s unspoken but urgent query: who will succeed Xi Jinping?
Dating apps are using AI to nudge men towards higher behaviour.
How one can change into a racing driver, even should you are usually not a multi-millionaire.
Retreating
IndiGo is spreading its wings. The no-frills budget airline, which brought a certain brisk efficiency to Indian skies, is now adding international destinations, and an entire bunch of frills, to grow its business. By the tip of March, IndiGo will serve 40 foreign destinations, including direct connections to Jakarta and Nairobi, up from 26 two years ago. In mid-November, the airline launched IndiGoStretch on popular routes, offering a business class-like experience with more legroom and baggage allowances. It also rebranded its flailing rewards programme, relaunching it as BluChip.
At 63 per cent market share, IndiGo has nearly two-thirds of India’s domestic market. Within the 18 years the airline has been in operation, it has seen a lot of its competitors fall by the wayside. The corporate survived by maintaining a razor-sharp deal with keeping costs low and achieving a high level of efficiency in its operations. Even when top management has modified, its fundamental operational tenets haven’t. The airline focused on getting you to your destination on time and with the smallest amount of fuss. IndiGo’s (mostly-female) blue-clad customer support staff also captured a cultural zeitgeist — exuding a confidence and efficiency that matched India’s economic mood within the noughties amid a second wave of post-liberalisation growth.
Pieter Elbers, who took charge on the airline in 2022, is betting on Indian outbound tourism to grow his business. By 2027, India is predicted to be the world’s fifth-biggest outbound tourism market, price $89bn, greater than double the worth recorded in 2019.
Though demand growth is powerful, several challenges remain. The past three many years of India’s aviation industry are replete with stories of those that dreamt too big and crashed. On this sector, nothing is more damaging than irrational exuberance. There are numerous examples — Jet Airways and Kingfisher Airlines immediately spring to mind — of aviation players who borrowed an excessive amount of to expand after which found themselves grounded. IndiGo may have to walk the tightrope between ambition and maximising efficient use of its aircraft with a view to avoid the identical fate.
Go figure
An outbreak of Guillain-Barré syndrome that began in Pune in Maharashtra has spread to other states. Andhra Pradesh on Sunday recorded its first fatality from the syndrome, a disorder where the immune system attacks nerve cells.
My mantra
“Clarity of purpose is important. It sharpens focus, ensuring that each decision — whether for the group, a business, or a single day — is aligned with the larger vision. In a world stuffed with constant distractions, this clarity acts as a filter, allowing me to prioritise what truly matters and drive meaningful progress.”
— Anish Shah, group chief executive, Mahindra
Each week, we invite a top Indian business leader to inform us their mantra for work and life. Need to know what your boss is pondering? Nominate them by replying to indiabrief@ft.com.
Quick query
What’s your current stock market strategy? Participate in our poll here.
Buzzer round
On Friday we asked: Which country now controls more of the world’s supply of nickel than Opec did of oil on the cartel’s peak within the Nineteen Seventies?
The reply is . . . Indonesia, which now accounts for 61 per cent of worldwide refined nickel supply.
Agasthya Vivek was the primary to send us the right answer. Congratulations!
We had quite an enthusiastic response for the quiz this week. Additional shout-outs to Mohammed Minhaajuddin and Akhilesh Kumar Karn, who got here in second and third.
Thanks for reading. India Business Briefing is edited today by Mure Dickie. Please send feedback, suggestions (and gossip) to indiabrief@ft.com.
