Talking Point This Week — Mixed Feelings

In other news, grocery stores in Canada have encouraged visitors to “shop Canadian” with signs and special labels in aisles alerting them to which products were made domestically, as a sign of standing up to America. Go National!

In terms of corporate news in India, it was a quiet week, with the big news being Bajaj Group deciding to buy out Allianz's stake in life and general insurance arms for over Rs 24,000 crore, while assuring investors with Rajeev Jain's continuity in Bajaj Finance. And Bain Capital finally laying it out that they are buying Manappuram Finance.

Here are the key talking points this week.

This week can be called mixed simply because while markets went one way, the cues around growth and tariffs were not. US Federal Reserve Chair Jerome Powell weighed in on the state of the US economy post the Federal Open Market Committee meeting on Wednesday. While the Fed is holding rates steady, its chairman’s outlook wasn’t entirely reassuring. The central bank sharply reduced its 2025 growth projection and Powell noted that uncertainty around the slowing economy is increasing. In as much as markets looked to Powell for direction, the takeaway was that things could be worse.

In other news, grocery stores in Canada have encouraged visitors to “shop Canadian” with signs and special labels in aisles alerting them to which products were made domestically, as a sign of standing up to America. Go National!

In terms of corporate news in India, it was a quiet week, with the big news being Bajaj Group deciding to buy out Allianz's stake in life and general insurance arms for over Rs 24,000 crore, while assuring investors with Rajeev Jain's continuity in Bajaj Finance. And Bain Capital finally laying it out that they are buying Manappuram Finance.

Here are the key talking points this week.

The Organization for Economic Cooperation and Development cut its outlook for most members and predicted the pace of global expansion to slow to 3.1% this year and 3% in 2026. Nations currently in the eye of the trade storm may see even sharper decelerations, with Canada’s growth rate tumbling to less than half the OECD’s December prediction, Mexico entering a recession and the annual expansion in the US wilting to 1.6% next year—the weakest since the aftermath of the Great Recession (and Covid).

Fed too sounded the bugle of caution, with the central bank sharply reducing its 2025 growth projection and Powell noted that uncertainty around the slowing economy is increasing. On state of the economy, Powell was, as always, more modulated, saying recession odds have moved up but aren’t high. One could argue that, for India, there is also some evidence of that in the advance tax numbers that have come out for the fourth quarter. However, corporate commentary on NDTV Profit for the last few days has been reassuring for Q4, and one now looks forward to the week after next for the business updates for the quarter.

BYD has introduced a groundbreaking electric vehicle charging system, boasting rapid recharge capabilities comparable to conventional refueling times. According to founder Wang Chuanfu, the new battery and charging technology demonstrated exceptional performance, achieving 292 miles of range in a mere 5 minutes during testing on a prototype sedan. The innovative system is slated for implementation in production vehicles next month, potentially revolutionising the electric vehicle landscape.

The ability to recharge an electric vehicle in a timeframe akin to a gasoline-powered vehicle's refueling cycle could significantly alleviate range anxiety, incentivising hesitant drivers to adopt electric vehicles. Notably, this technology surpasses the charging speeds of Tesla's Superchargers. For many, while this helps supercharge the EV adoption, it puts China as the North Star of the going-green revolution. One should try and catch the videos of the BYD super-factory that is coming up — there is some scale there.

The General Office of the Central Committee, an office directly under China’s ruling party, said the plan was to vigorously boost consumption, expand domestic demand, and “enhance consumption capacity by increasing income and reducing burdens”. The plan announced on Sunday also called for support to promote inbound and domestic tourism, with support planned to be given to ice and snow regions to help them develop into globally recognised winter tourism destinations. Unilateral visa-free arrangements will be expanded and regional entry policies will be optimised. Chinese leaders pledged at an annual parliamentary meeting in January an additional 300 billion yuan ($41.45 billion) of ultra-long special treasury bonds for consumers’ subsidy support.

US airline stocks have now erased over $20 billion of market cap over the last four weeks, giving company to Tesla which has seen a sharp plunge in its m-cap in recent period. One of the reasons behind the slump in airline stocks is that DOGE's spending cuts are ramping up quickly. United Airlines announced government travel is down by a massive 50%. For perspective, historically, United Airlines does over $1 billion of revenue from government travel per year. Delta Air Lines and American Airlines have revised guidances lower as well. A Reuters note said the following: "American (Airlines) has adjusted its capacity in the Washington area, which has been one of its most profitable markets, as a result of weakness in government-related bookings". And it is probably showing in Washington DC real estate, where home prices are now at their lowest since January 2020, down over 20% since November 2024.

Jefferies has reaffirmed its 'buy' rating on JSW Energy, while increasing its target price to Rs 700 from Rs 680. The brokerage firm forecasts robust growth for the company, with an expected 36% Ebitda compound annual growth rate between FY24-27E, and a 24% CAGR between FY24-30E.

HSBC has upgraded its rating on Tata Motors to 'buy' from 'hold', despite reducing its target price to Rs 840 from Rs 930. The brokerage firm cites undemanding valuations and anticipated margin growth as triggers for the upgrade, indicating that the stock's current price does not fully reflect its potential for growth and improvement.

When it comes to consumers, Goldman Sachs has maintained its 'buy' rating on Godrej Consumer, with a target price of Rs 1,370. The brokerage firm views the company's third-quarter performance as an anomaly in an otherwise strong volume growth trajectory.

Goldman Sachs expects Godrej Consumer to emerge as the fastest-growing FMCG company in its coverage universe in fiscal 2026, driven by its robust growth momentum. And while defence has been under the dock for a while, UBS noted that the government's clearance of Rs 54,000-crore procurement proposals is a positive for defence state-owned enterprises, amid concerns of slowing government capex. In this backdrop, the brokerage called FY26 an inflection year and issued a 'buy' call on Hindustan Aeronautics Ltd.

Lastly, FII voices have sounded constructive on India. Florian Weidinger of Santa Lucia Asset Management, which manages about a billion dollars, told us that the dollar index cool-off will aid Asian central banks which have been running interest rates as they have been defending against inflation and the US dollar. Jim Walker of Aletheia Capital asserted that it is a "great time to buy stocks in India" for the next three, five or 10 years, adding that the Indian stock market has "the best profit cycle" in Asia. We saw flows turn positive after a while, and one only hopes that the trend continues.

Until Next Time...

Niraj Shah