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good morning. A few weeks ago I read X’s thread and was unhappy about going abroad on my days off and came across too many Indians. I have comically found his anguish, but I have no denying that I am on vacation abroad as if our lives depend on it. And Indigo hopes to cash it by expanding its footprint (wingspan?) overseas. But first, why did the stock market fly south?
Low stock
Indian stocks have been sliding downwards for several weeks, with some indices now in the territory of the bare market. The 30-stock benchmark BSE Sensex has fallen by about 7.5% since mid-December, down about 10,000 points from its all-time high of 85,978 in September 2024. : The BSE SmallCap index has dropped by 21% from the high, while the BSE 150 Midcap 150 has dropped by 19%. You can quote more numbers to explain the trend, but you take a photo so let’s see what’s causing this slide and what the future holds.
Foreign portfolio investors have been withdrawing money primarily from India since September last year, and that trend continues. In January, they withdraw 78 billion rupees ($9 billion) from India, and so far they have taken out an additional rupees in February. India’s losses are China’s profits, and foreign investors are taking part in a market that is rising especially in technology inventory after a massive unveiling of their country’s China-generated AI product Deepseek.
Over the past few years in India, we have a strong domestic participation in the market, so we tend to think there is no need to worry about foreign money. It is true that more household savings have poured more savings into the stock market with the introduction of regular monthly investments using “systematic investment products” provided by mutual fund homes. However, massive withdrawals by foreign investors continue to be a key market activist. Another factor in domestic investment growth is direct trading by retail investors who have “discovered” stocks as a potential source of income during the coronavirus pandemic. This is the first market witnessed by these new and mostly young investors, and current losses are likely to have a snowball effect.
So what is your outlook? The overwhelming meaning I gathered in conversations with fund managers and institutional investors was that there was no trigger that would likely change trends significantly in the near future. Big predictable events (budget, interest rate reductions) are behind us. Even at current levels, Indian stocks are overvalued. There is great uncertainty around the world as Trump shakes economically (tariffs) and politically (Gaza, Ukraine). Things can get worse before they get better. As always, at the individual stock level, there is profit. However, without sudden positive development, the comprehensive narrative could remain negative for several more months.
What is the outlook for the Indian stock market? Click reply or email indiabrief@ft.com.
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Get on the plane
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Indigo has spread wings. The noble storage airline, which has brought a certain amount of active efficiency to the Indian skies, is now adding international destinations and plenty of frills to grow its business. By the end of March, Indigo will offer 40 foreign destinations, including direct links between Jakarta and Nairobi for 26 years, two years ago. In mid-November, the airline launched Indigo Stretch on a popular route, offering a business-class-like experience with more legroom and baggage allowance. We also rebranded the Frail Rewards program and rebooted it as Bluchip.
With a market share of 63%, Indigo has almost two-thirds of the domestic market in India. The airline has been running for 18 years and I’ve seen many of my competitors fall on the roadside. The company survived by keeping costs low and maintaining a sharp focus on achieving high levels of efficiency in its business. Even if top management changes, there is no basic operational doctrine. The airline focused on getting to your destination on time. Indigo’s (almost female) blue-covered customer service staff captured a cultural era. This exudes confidence and efficiency comparable to the Indian economic atmosphere amid a second wave of post-liberalization growth.
Peter Elbers, who was in charge of the airline in 2022, is growing his business by betting on outbound tourism in India. By 2027, India is expected to become the world’s fifth largest outbound tourism market, worth $89 million, more than twice the value recorded in 2019.
Demand growth is strong, but there are still some challenges. India’s aviation industry over the past 30 years is full of stories of people who have been so big that they crashed. In this area, nothing is more harmful than irrational vitality. Jet Airways and Kingfisher Airlines come to mind right away – there are too many examples of aviation players to expand. Indigo should walk the tightrope between ambition and maximizing efficient use of the aircraft to avoid the same fate.
Go to the diagram
The outbreak of Gilan Bale syndrome, which began in Pune, Maharashtra, has spread to other states. Andhra Pradesh on Sunday recorded the first lethality from syndrome, a disorder in which the immune system attacks neurons.
My Mantra
“Clearness of purpose is essential. It sharpens the focus and ensures that every decision, whether it’s a group, business or a day, aligns with a bigger vision. In a world filled with constant distractions, this clarity is what makes it so clear. Sa can act as a filter, prioritize what really matters and promote meaningful progress.”
– Anish Shah, Group Chief Executive Officer of Mahindra
Every week we invite top Indian business leaders to teach us the mantras of work and life. Want to know what your boss is thinking? Reply to indiabrief@ft.com and nominate.
Simple questions
What is your current stock market strategy? Please join the vote here.
Buzzer round
On Friday we asked: Which countries now dominate the nickel supply more than OPEC did oil during the cartel peaks in the 1970s?
The answer is. . . Indonesia currently accounts for 61% of the world’s sophisticated nickel supply.
Agasthya Vivek was the first to send us the correct answer. Congratulations!
There was a very enthusiastic response to the quiz this week. Additional cries for Mohammed Minhaijuddin and Akhilesh Kumar Khan came in the second and third.
Thank you for reading. The Indian Business Briefing is being edited today by Mure Dickie. Send feedback, suggestions (and gossip) to indiabrief@ft.com.
