India's Troika Of Good Luck | Joining The Dots

A week is a long time in politics. That line from Harold Wilson, the two-time UK prime minister under whom the pound was devalued in 1967, has rarely fitted better than it does now, whether you look at Nvidia, at Jensen Huang, or at how global investors view Indian markets.

Thirty-five days ago, India was one of the world's most unloved markets. Today it is one of the best performers. Some of that is earned. Indian companies have done far better than expected, and the September quarter has been blistering by any measure. But it is also true that India simply looks better in comparison.

 Some Luck, Finally?

Part of the reason India has found favour again is that the AI trade is losing steam. The US-Iran war, India's biggest headwind, has also lost its punch.
Call it a troika of good luck. 

The Democrats' sweep of the US midterms leaves the Trump presidency with little steam. The world has suddenly realised the AI trade is not all it was made out to be. And Indian companies have shown more resilience than anyone expected.

The trouble with good luck is that none of it is permanent. A president with two years left can still push back against a Democratic Congress. A cooling AI trade can reignite on a single chip breakthrough. And Indian resilience is only as good as the next quarter's numbers. Wilson's week is already running.

Also Read | Oil, Elections and Equities: A Blip or Structurally Better 2027?

 The Untouchable Falls 

There have been theories upon theories about why the AI trade would fail. Nobody expected its sharpest jolt to come from the flaws of one man. Jensen Huang, once the poster boy of innovation who could do no wrong, has in a matter of days become the subject of a thousand memes and all-round ridicule. His fall shows what happens when you build arrogance on a sense of infallibility and a belief that the rules don't apply to you.

The stock shows the pain clearly. Nvidia shares plunged as much as 14% on the day he resigned, briefly trading below $150, and its market value sank under $4 trillion. The $601 billion wiped out in that one session may be the biggest single-day loss for any stock. Nvidia is now down about 35% from its October 6 record high of $239. It has shed roughly $1.6 trillion in market value over six straight weekly declines, its longest losing streak since 2012, and has slipped below Apple.

Amid all the commentary, several conspiracy theories suggest Huang is being treated more harshly than he deserves. There may be something to that. But the fact remains that he did exactly what he has been accused of.

Also Read | Who Benefits From Jensen Huang's Nvidia Exit? Indian Influencer Breaks Down Who Stands To Gain And Lose

 The Worry Closer Home

Closer home, the bigger worry is inflation. Retail inflation has breached the Reserve Bank of India's upper tolerance limit of 6% for the first time in two years. That was expected, but it all but guarantees another rate hike at the RBI's next policy meeting. Add rising bond yields in the US and India, and a near-certain rate hike by the US Federal Reserve, and a familiar pain point is back for India.

Thirty-five days ago, India was unloved, Huang was untouchable and inflation was contained. A week, it turns out, is long enough to change all three.

Enjoy the party. Just don't be the last one holding the punch bowl when the music stops.