What is the connection? Maybe there is none. Or perhaps the visible souring of ties between Washington and New Delhi is playing out on trading screens too.
It has been a curious week for Indian markets. Like most emerging market peers, they have been struggling with high crude prices, US Treasury yields at multi-year highs (the 30-year is at its highest since 2002) and growing inflation fears. This week brought more worries.
The impact of a strong El Nino is now visible on the ground. Maharashtra has declared drought in 265 of its 358 talukas, and Andhra Pradesh in 388 mandals across 21 districts. Morgan Stanley expects margins to fall in seven of 10 sectors in the September quarter, even as JPMorgan and Jefferies still see healthy profit growth. Several companies have yet to pass on higher costs fully.
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A souring of relations between Washington and Delhi has queered the pitch further. On Monday, Finance Minister Nirmala Sitharaman said trade talks had reached a "plateau", beyond which giving or taking would be "very, very difficult". On Thursday, US Labour Secretary Keith Sonderling suspended eight companies from the Permanent Labour Certification (PERM) programme, the first step towards an employment-based green card.
The list included Indian IT majors TCS, Infosys, Wipro and HCLTech, along with Cognizant, Capgemini, Microsoft and Adobe. TCS said its applications under the programme had been in single digits over the last two years. Indian IT companies played down any impact, but the message goes beyond the hiring plans of a few firms. At the same news conference, Vice President JD Vance described foreign workers on H-1B work visas as "indentured servants". India's Ministry of External Affairs called the remark "unwarranted" and "deeply offensive".
What does this have to do with markets? With the trade deal stalled and political uncertainty in the US ahead of the November 3 midterm elections, the risk of further headwinds grows. Add Elon Musk to the mix. On Wednesday he said on X that Starlink was being blocked by "oligarchs" protecting their "monopolistic chokehold", and a day later asked whether Ambani was "the real boss of India".
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The government called the claim "baseless and misconceived". Reliance Industries, a Nifty heavyweight, fell about 2.6% on Thursday and dragged the index lower. The bigger question is what the next level of trade wars looks like. How far should regulation go to protect citizens? At what point does protecting consumers start hurting businesses and, eventually, the larger cause? Private hospitals faced that question this week.
Last week, the Supreme Court pulled up hospitals over mark-ups, citing a cancer drug supplied to retailers at Rs 2,700 but carrying an MRP of Rs 27,000, and asked whether a uniform 16% margin cap could apply to all medicines. On Thursday, the National Pharmaceutical Pricing Authority approved a 30% cap on trade margins for non-scheduled anti-cancer drugs (those outside the essential medicines list), with the list of covered drugs still to be finalised. Hospital stocks remain volatile.
Companies we spoke to argued that administering medication, keeping cold chains intact and maintaining infrastructure all carry real costs. One hospital chief said price caps will mean fewer cutting-edge cancer drugs reach the country. Another likened the cost of treatment at a private hospital to having tea at a five-star hotel. Hospital ROCEs (return on capital employed) will eventually adjust to price caps, and fighting a policy that favours cancer patients is a losing battle.
Signing off with a few words on the late Nana Patekar. The veteran actor died in Goa on Thursday, aged 75, of a suspected cardiac arrest. When the news broke, our newsroom was soon swapping favourite Patekar films and dialogues, many of them now popular memes. That so many of us have a favourite Nana performance at our fingertips, long after his best-known roles, says plenty about the mark he left as an artist
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