Month: February 2025

It has been a volatile few weeks for global financial markets as they braced for tougher tariffs from the US president Donald Trump. JIM ROGERS, chairman of Rogers Holdings, tells Puneet Wadhwain a video interview that he has sold out from nearly every stock market across the globe. If the markets were to correct more in India and investors were depressed, worried and despondent, he would then probably buy Indian stocks. Edited excerpts: 

How do you evaluate Donald Trump’s presidency thus far and its impact on the global financial markets? Do you expect him to follow through on his tariff threats, or are they just a scare tactic?

The situation with Mr. Trump is difficult to evaluate because he himself does not know what he wants. He changes his opinions every day and every week. We know what he has said and done in the past, so we have some idea of what he can/cannot do.  

My evaluation of Donald Trump is that he will do whatever he thinks is good for that day, or that week. Some of the things that he says and does are good for the US, while some are not. He said he will remove some of the restrictions and regulations, which I hope he will. He will also open up trade, and restrict it with people he does not like. 

I think that the world and the US will have a complicated future because Mr. Trump does not know what he wants. Donald Trump’s views are always changing, and that’s complicated.

So in essence, you think he is good for the US and bad for the global financial markets? 

Donald Trump was elected after a long period of bad (stock) market in the US. Now, the markets are relatively better as there has been a change of guard. It has been the longest period in American history without a problem. I think we will have a lot of problems soon. It does not matter who causes these problems – whether it is Donald Trump or someone else. That said, Washington seems to be open to places like India as they see a lot of change happening there. If I am right, these changes will be good for India and the US both. 

How do you see global markets shaping up in the next one year? What’s your view on India? 

I have already sold all my American shares, but I have not started selling short there yet. That’s because things are not crazy there as yet for me to go short on the US markets. The whole world, including the US, is overdue for problems. That’s because nearly all stock markets around the globe have done well recently.  

For instance, look at India. I had invested in India many times in my life. However, this is the first time in my life that I believe the central dispensation (government) in New Delhi understands the Indian economy, and what all needs to be done. I am more optimistic about India than before. For the first time in my life, I am actually enthusiastic about India. 

Which other equity markets across the globe appear attractive to you? Where all have you been investing? 

I do not like to buy markets that are making all-time highs. As a rule, if the markets are correcting and investor are not worried, I do not buy. So, if the markets were to correct in India and investors are depressed, worried and despondent, I would probably buy Indian stocks. I have sold out from nearly every stock market in the world, except China and Uzbekistan. I sold Japanese shares too soon, but that was my strategy. I own Chinese shares mainly because they have not seen a vibrant recovery post the Covid pandemic. They are trying to change and make things better.

Why are you not buying India after the sharp correction seen in the last few months? 

I am not buying Indian stocks now. The Indian stock markets are overreacting to global developments, especially related to Donald Trump. That said, if the Indian markets go down more from here on, I hope I can buy stocks there again. I need for the Indian stock markets to go down more before I start buying.  

The Indian stock markets made all-time highs in 2024. I now need to see a serious decline and despair in the Indian markets before I start buying. When people get despondent and desperate about Indian markets is when I would like to buy stocks there again.

Do you see more upside in gold prices? What about crude oil? 

I own gold, but not adding to my position right now. That said, I am interested in silver and will buy more this week. I also own crude oil, but not adding more of it to my portfolio just yet.

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Domestic equity indices staged a sharp recovery during the mid-market session as the key benchmark and broader indices recouped major losses. The broader indices, like NIFTY midcap 100 and small-cap 100, jumped 500 points from the intraday lows of 15490.

Meanwhile, broader indices were also trading in red with the BSE Midcap index and Small-cap index falling in the range of 0.70-0.85%.

Market participants were cautious as U.S. Treasury yields rose after testimony from Federal Reserve Chair Jerome Powell raised some doubt about the path toward lower rates. Rising crude oil prices also weighed on domestic sentiments. Crude oil prices rose amid concerns over Russian and Iranian oil supply and sanctions threats despite worries that escalating trade tariffs could dampen global economic growth.

On the global front, Asian markets traded mostly in green as investors digested U.S. President Donald Trump’s tariff impact on regional economies. Back home, in the stock-specific development, Indo Count Industries surged after the company reported a healthy set of numbers for the December 2024 (Q3FY25) quarter.

The SENSEX recouped major losses to trade at 75121, down by 121 points or 0.22% after trading in a range of 75388.39 and 76409.27. The index had 10 stocks advancing and 20 stocks declining.

The NIFTY50 traded at 23,039.55, down by 19 points or 0.14% after trading in a range of 22798.35 and 23097.95. The index had 18 advancing stocks and 32 declining stocks.

The top gainers on Nifty were SBI Life up by 3.01%, HDFC Life Insurance up by 2.21%, Apollo Hospital up by 1.88%, Tata Consumer up by 1.44% and Trent up by 0.96%. On the flip side, Indusind Bank down by 2.39%, Bharat Electronics down by 2.28%, Hero MotoCorp down by 2.19%, ITC down by 2.10% and Reliance Industries down by 2.01% were the top losers.

Asian markets were trading mostly in green; Hang Seng advanced 325 points or 1.53% to 21,619.86, Jakarta Composite gained 42.82 points or 0.65% to 6,574.81, Shanghai Composite strengthened 0.96 points or 0.03% to 3,319.02, KOSPI increased 7.62 points or 0.3% to 2,546.67 and Nikkei 225 surged 104.46 points or 0.27% to 38,905.63. However, Straits Times fell 2.08 points or 0.05% to 3,858.68 and Taiwan Weighted lost 43.65 points or 0.19% to 23,340.40.

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The Reserve Bank of India (RBI) cut the policy repo rate by 25 basis points last week and set it to 6.25 per cent from its current level of 6.5 per cent. People are now eagerly waiting to see how the banks will react with changes in lending and deposit rates.

State Bank of India Chairman CS Setty has confirmed that the bank will revise its lending rates linked to the external benchmark lending rate or EBLR this month itself. Speaking to Business Standard, Setty said, “We will have an ALCO (asset-liability committee) meeting this week, and from this month itself, the new rates will be effective.”

Will banks cut deposit rates soon?

Setty also said that probably most banks are not going to reduce deposit rates at this juncture. Credit demand in the current quarter remains strong, he said.

“They may wait for this quarter to be over. This is a busy period with good credit growth, and banks need deposits to support lending. A few banks may make a move, but most will likely wait until the next quarter before deciding on deposit rate cuts,” he said.

RBI’s rate cut and its impact

February 7 Sanjay Malhotra, the new RBI Governor, indicated a repo rate cut, and it kept the Standing Deposit Facility (SDF), the Marginal Standing Facility (MSF), and bank rates standing at 6.5 per cent.

Deputy RBI Governor M Rajeshwar Rao said the deposit rates will take at least two quarters to reflect the rate adjustments. RBI Governor Malhotra also clarified that in the NCLR system, the change in deposit rate will be a gradual process. Long-term fixed deposits of five years or more will not experience an immediate revision.

As banks evaluate liquidity and credit growth, severe cuts in deposit rates would probably also be very much dependent upon the economic conditions during the next quarter.

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Gold prices have been on fire.

At the time of writing this on February 11, the price of the yellow metal was $2,913 per ounce (which equals 31.1 grams). Gold is bought and sold internationally in US dollars.

From December 31 to February 11, the price of the yellow metal has gone up by 11.6% in dollar terms. In rupee terms, the gold price at the time of writing this, on BSE, was ₹85,635 per 10 grams. This implies a return of close to 13% during the course of this year. The gold prices across different cities seem to be higher than this, implying returns of even higher than 13% in rupee terms. This at a point when stock prices have been falling.

Now, this raises several points.

First, why have gold prices been on fire? The two word answer for that is Donald Trump, the US president. Trump has been taking a series of economic measures that he and his administration think will help the American economy. These measures have the potential for destabilising the global economy from where it currently is.

In such a scenario, many investors look at gold as a safe haven investment. This has led to money flooding into gold and thus driving up prices at such a quick pace.

Second, why are returns higher in rupee terms? The simple answer for that lies in the fact that the rupee has depreciated against the dollar in the last few months, and that has spruced up returns on gold in rupee terms.

Third, in order to understand the meaning of gold as a safe haven investment, one needs to understand what is known as the Lindy effect. The Lindy Effect basically suggests that the longer something has been around, the greater are its chances of continuing to exist in the days to come.

Or as Nassim Nicholas Taleb writes in Antifragile—Things That Gain from Disorder: “If a book has been in print for forty years, I can expect it to be in print for another forty years. But, and that is the main difference, if it survives another decade, then it will be expected to be in print another fifty years. This, simply, as a rule, tells you why things that have been around for a long time are not “aging” like persons, but “aging” in reverse.”

As he further writes: “Every year that passes without extinction doubles the additional life expectancy. This is an indicator of some robustness. The robustness of an item is proportional to its life!”

Now, how does this apply to gold and safe haven investing? Gold, a durable and non-perishable asset, has maintained its value for centuries. During times of uncertainty—whether political, economic, or financial—many individuals turn to gold as a reliable investment. It serves as a safe haven, a trusted refuge for preserving wealth. This practice of safe-haven investing has endured for hundreds of years, solidifying gold’s role as a timeless store of value.

So, given that gold has been looked as a safe haven of investment in the past, it will be looked as a safe haven in the future as well. This stems from the fact that gold was money across large parts of the world until paper money or fiat money became the order of the day.

Fourth, the media is currently flooded with stories on gold. Some stories have taken this opportunity to talk about having gold in the overall investment portfolio, in order to emphasise on the importance of diversification, that is not putting all eggs in one basket, when it comes to investing. There are other stories in the media which are asking the question: Should you invest in gold now? These stories miss the most important point, which is that investment portfolios need to be well diversified at all points of time, for the simple reason that no one can see the future coming with all clarity.

In the last few years, anyone who had money invested in gold, would have done much better by investing that money in stocks. But then the tide has turned over the last few months and gold has been doing well. There is no way of knowing these things in advance. The world is too complicated to be able to make these predictions confidently over and over again. Hence, talking about gold being important for diversification once gold prices have already run up quite a bit, and stock prices have been falling, doesn’t really achieve anything.

Also, trying to predict the future price of gold is a bit of a mug’s game, because there is no way to know for sure. That’s the long and the short of it.

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Sensex is down over 1,000 points on Tuesday and Nifty down 1.3 per cent as Donald Trump’s tariff announcements spooked Dalal Street and weak corporate earnings weighed on the market sentiment. The benchmark Sensex was trading at 76,259, down 1,047 points, or 1.33 per cent. Zomato (-5.05 per cent), Tata Steel (2.91 per cent), L&T (-2.83 per cent), Bajaj Finserv (-2.74 per cent), Hindustan Unilver (2.18 per cent) were among the top losers on the 30-share index.

The broader Nifty50 was down 1.3 per cent, or 303.5 points, at 23,078 in the afternoon. While Eicher Motors (-6.61 per cent), Apollo Hospitals (6.37 per cent), and Shriram Finance (3.7 per cent) were the biggest losers, Adani Enterprises (+1.45 per cent), Grasim (0.87 per cent), and Trent (0.54 per cent) were the top gainers on the 50-share index. BSE MidCap was trading at 40,982, down 1,179 points, or 2.8 per cent. BSE SmallCap was down 1,613 points, or 3.29 per cent.

Trump on Monday raised tariffs on steel and aluminium imports to 25 per cent “without exceptions or exemptions” and said he would announce plans to impose reciprocal levies on several countries in the next two days.

The ongoing decline in Indian equities is driven by uncertainty on US tariffs, Reuters quoted UR Bhat, co-founder of investment firm Alphaniti Fintech, as saying, with some analysts adding that the bearish undertone is being fuelled by slowing earnings and sustained foreign outflows.

Both the Nifty 50 and Sensex lost about 1.5 per cent in the last four sessions. Foreign investors have offloaded Indian shares worth $9.94 billion so far this year.

On Tuesday, financials slipped 1 per cent, led by a 1 per cent decline in HDFC Bank.

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