This report is from this week’s CNBC’s “Inside India” newsletter which brings you timely, insightful news and market commentary on the emerging powerhouse and the big businesses behind its meteoric rise. Like what you see? You can subscribe here.
The big story
India is hungry for energy, and it’s doing something about it.
So why does India want to deepen its ties with such a volatile energy source?
Need to know
Canada alleges Indian involvement in Sikh separatists plot. The Canadian government alleged this week that Indian Minister of Home Affairs Amit Shah is behind plots targeting Sikh separatists in Canada. The allegation was revealed by Canadian Deputy Foreign Affairs Minister David Morrison, who told a parliamentary panel he had confirmed to a U.S.-based newspaper that it was Shah who is the accused behind the plots. India has previously dismissed the claims as baseless.
India is confident it can hit its 7% growth target for its 2025 financial year. The country’s Secretary of the Department of Economic Affairs Ajay Seth said on Tuesday the goal is “very much doable.” Seth is also optimistic about India’s growth rate for its third and fourth quarters despite slower capital expenditure in some states. India’s fiscal year runs from April 1 to March 31 the following year.
The Reserve Bank of India lowered its forecast for India’s second-quarter growth. Previous estimates by the RBI put GDP growth during India’s fiscal second-quarter — which is from July to September — at 7.2%. However, the RBI reduced its forecast to 6.8%, attributing it to weakness in areas like Nifty earnings forecasts and goods and service tax collections.
What happened in the markets?
Indian stocks are struggling to maintain momentum. The Nifty 50 index has essentially traded flat this week. The index has risen 11.4% this year.
Similarly, the benchmark 10-year Indian government bond yield has been muted this week trading 3 or 4 basis points around 6.83%.
On CNBC TV this week, Aravind Maiya, CEO of Embassy REITs, observed that there are more companies setting up their global capabilities centers in India. Of the Fortune 500 companies, 23% have a GCC in India, said Maiya, and that proportion is expected to go up to 43% in the next five-to-six years. Crucially, those centers are now so-called “transformation hubs” engaging in cutting-edge work, rather than the support centers they were in the past.
Meanwhile, Landsberg Bennett Private Wealth Management’s Chief Investment Officer Michael Landsberg said investors should diversify their portfolios outside the U.S. for growth. Specifically, Landsberg likes India, because the country’s growth is two-to-three times higher than that of the U.S.