Interview with Mint on war impact on India: Mint 3rd April 2026

 https://www.livemint.com/money/west-asia-war-india-recession-risk-economic-slowdown-madan-sabnavis-household-budgets-job-market-inflation-interest-rate/amp-11775105443794.html

The cracks in the fuel price ceiling: Indian Express 29th march 2026

 

With the price for crude soaring and oil marketing companies absorbing the blow, attempts to shield consumers may be approaching their breaking point

The government has lowered the excise duty on petrol and diesel to protect the consumer as of now. It is not certain that this situation will remain. There can be further action depending on the course of the war in West Asia and the price of oil. At present, the price of fuel at the pump is unchanged for public sector companies, while one private company has announced an increase. So, for how long can the retail price be held on to?

Let us look at the structure of petrol prices in Delhi. At present, one litre of petrol costs Rs 95. Of this, the actual price charged by the oil marketing companies (OMCs) to the dealer is around two-thirds of the final price or Rs 63/litre post the excise cut. The excise component is now around 12.6 per cent — this is the amount that the government earns of Rs 11.90/litre. The dealer commission is around 4.6 per cent or Rs 4.40 per litre. And then there is the value-added tax, which is 16.2 per cent of the price. VAT, which is charged on an ad valorem basis, is one part of the price that varies across states. This explains why the price of petrol varies across states.

So far, the burden of higher oil prices is being borne by the OMCs. The 66.6 per cent share in the final price also includes a profit being earned by these companies which keeps getting reduced as the cost of crude goes up. The interesting bit is that while Brent had peaked at $118.4/barrel on March 20, the weighted average price for India is close to $150 per barrel. As of March 24, the average price was $147/barrel. The price was $ 71 on February 27, which was just before the war began. Add to this the rupee depreciation of 3.3 per cent during the period from February 27 to March 25, and the cost is up further. It can be seen from this that as long as the Centre and state’s share in the static final price remains unchanged, the same is absorbed by the OMCs.

Here, it must be pointed out that the OMCs earned a higher profit when the price of oil came down to the range of $60-70 per barrel as the consumer price was unchanged at Rs 95/litre and the excise and VAT rates remained unchanged. The government did impose a supernormal profit tax on these companies and hence the gain was apportioned between the two.

However, with the cost of crude increasing sharply, the government has to take a call on apportioning this amount. In the Union budget for FY27, it has been assumed that collections from the excise tax would be Rs 3.88 lakh crore as against Rs 3.36 lakh crore in FY26. The present reduction in excise duty would mean a decline in tax collections. A similar action could also be considered by states. The option to increase the retail price can be exercised and doing so will probably steady the fiscal maths of the government. However, it will run the risk of pushing up inflation at a time when there is already concern over the possibility of this being an El Nino this year.

On balance, it may just be a matter of time before the price matrix is revised. It does look as if the next level of intervention will be at the consumer end, if and when required.

The bulge in government holds held by RBI could be put to work: Mint 24th March 2026

 https://www.livemint.com/market/bonds/rbi-government-bonds-build-infrastructure-open-market-operations-banking-g-secs-11774163252024.html

Where is the rupee headed? Financial Express 20th March 2026

 The Iran War has evidently turned the markets upside down. What appeared to be going well for the world economy has now become an uncertain spectre. The stock market continues to display nervousness with no end in sight. But a factor which affects all countries is currency, and the rupee is once again under pressure. With the Rs 92 mark being breached, the logical question is, how much higher or lower can it go?

The answer is really a shrug because one does not know the intensity and length of the war. The rupee will be driven by two sets of factors—the fundamentals (imports, remittances, foreign portfolio investors [FPIs]) and the strength of the dollar. This is the challenge for the Reserve Bank of India (RBI) which has, so far, dexterously steered the currency away from volatility. The issue is that whenever one speaks of the rupee, it is necessary to also see how other currencies are faring. Absolute depreciation numbers do not connote much as the current spate of movements is interlinked with what happens to other currencies.

Within the fundamentals, the obvious factor pressuring the rupee is the higher cost of imports. As oil is the largest component of the basket, any increase in price gets added to the trade deficit. Products like fertilisers and chemicals also get affected indirectly, which widens the deficit. On the other hand, the increase in exports may not work out given that the direction is also to countries embroiled in the war.

As for remittance flows, there is a large expat population in the Gulf and other western countries. This segment has been a useful contributor to remittance flows that has strengthened the current account deficit even when the trade deficit was high. Remittances from this region could be around 35% of the total, which is significant, given that the country could be getting anything between $135 billion $150 billion in good times. Also the expat population in this region could tend to belong to the low-skilled labour class whose earnings are also not very high. This means that any job loss or reduction in pay can lead to a sharper fall in remittances. This contrasts with the western world, where the population tends to be in high-skill jobs.

FPIs have been quite destabilising in the last couple of years, especially at a time when the West is going in for quantitative tightening, which has lowered the quantum of investible funds. To top it all, any news on tariffs has caused the funds to shift markets, which is now exacerbated by the war. Therefore, these flows will have a bearing on the daily movement in currency.

The conundrum here is that investments are based on how investors see markets and growth of economies. Further, currency stability is important as a declining rupee will mean lower real returns. Therefore, the end result is always uncertain. Indian markets were not the best performing ones until the war began as there was a sense that stocks were overvalued. Hence, the review of alternative markets that will be made by these investors will guide these inflows.

Normally, all these fundamental factors are represented by the change in forex reserves. Here, the economy is in a strong position as reserves are comfortable at over $700 billion covering around 11 months of imports.

Beyond fundamentals lie the external factors. Speculative forces are important here. A falling rupee will make importers rush to buy dollars, while exporters would like to hold back retracting their dollars, hoping to get more rupees once the conversion takes place. This becomes self-fulfilling and hence the RBI’s action becomes important. As a custodian of forex assets, the RBI has been stepping in often to ensure that these forces are curbed ,through the outright sale of dollars or taking forward positions, which sends strong signals to the market. The positions in the non-deliverable forward market provides good indications on this aspect.

But when it comes to what happens to the dollar, no central bank can do anything. When the dollar strengthens, there is a tendency for other currencies to weaken. The dollar index has moved closer to the 100 mark, which has automatically pulled other currencies (including the rupee) down. The trick is to ensure that the rupee remains within range and does not lose out on the depreciation, which will help retain export competitiveness without making it appear as a weak currency. Once again, it is the RBI that holds the strings.

Presently, it is hard to guess which way the dollar will go. With gasoline prices already climbing, inflation should increase in the US, causing the Fed to pause rate cuts. This means the dollar will strengthen. However, an unending war will impose more pressure on the dollar as it would not reflect well on the economy.

The rupee, though depreciating, looks satisfactory on a comparative scale. Being a country with a current account deficit means that the rupee should weaken. This is more so at a time when the capital account has been weak with negative FPIs and low, single-digit foreign direct investments, as repatriations are high. The present exchange rate of above Rs 92/$ does not look off the mark, though the indications going by the non-deliverable forward market talk of Rs 93/$ in the next couple of months. A conservative approach will be to look at a range of Rs 92-93/$ for the next month or so.

Will the new series of GDP accomplish anything? Free Press Journal 16th March 2026

 

One for the novice: Book review of Booms, Busts and Market Cycles: Book review in Financial Express 15th March 2026

 One thing that will catch the reader’s attention is the author's analysis of returns on housing compared with equities (Source: Bloomberg)

Maneesh Dangi is an office-hold name when it comes to stock markets as his views on television are closely followed by dealers in their offices. It is quite appropriate that he has written a book on how to train one’s mind to be an investor in his book Booms, Busts and Market Cycles. As the title suggests, he takes readers through all these phases with clear guidance on how to read such situations and invest smartly.

He does give a lot of advice, but the one thing that will catch the reader’s attention is his analysis of returns on housing compared with equities. It is more of a revelation. He argues that returns on housing over a long period of time are the same as equities across the world, which is around 5% in real terms. And the more important part is that the volatility in housing is just half of equities, which means it may just be a better opportunity with the risk carried being much lower. This can be a useful tip to consider when individuals are looking to diversify their portfolios to maximise returns as housing is not often treated as part of asset portfolio diversification.

Dangi also takes the reader through asset allocation, which he links with age profile as this gets linked with requirements. At age 25 one should opt for equities. When one is 45, he advises to trim exposure to equities, bringing down share to 15%. At age 65, one should be out of equities and invest only in short-term funds, that, too, only after exhausting all options open to senior citizens. This is the time to move away from markets for sure. He goes one step further and signals to high networth individuals to try out the US equity markets, along with diversified or index funds in the domestic market.

Dangi gets more eloquent when he writes about knowing the fund manager. Here his insights are very interesting. A thought which may not have occurred to the reader in the normal course is that the sum of all strategies in the market must be equal to the market return. So the question is who gives the alpha to the investor? There are mutual funds as well as DIIs and FIIs as well as the retail investors who are all in the game. The promoters interestingly hold around half of the equity across the world and are supposed to be the outperformers and rarely buy or sell as they are the ones who have skin in the game.

So who really are the gainers? Here he points out that it is not the FIIs who derive the alphas as they work based on benchmarks. It is the retail investors who hold 8-10% who contribute to the alphas in a negative way. They are the losers on the basis of which others gain. Their shortfall become the excess returns for others.

He simplifies some principles for the reader on how to choose portfolio managers. He gives tips like being wary of portfolio managers who have never struggled. Or to stay away from performance artists. Again, the chapter on interpreting markets is quite engaging as it also warns us on interpreting certain observations as a phenomenon. Often a crowded mall can make us conclude that consumption has revived and the stocks of such companies will do well. It does not work that way. He prefers to use the first derivative of change rather than absolute inflation or GDP numbers.

Dangi prefers PMI to IIP numbers to gauge the economic environment. Markets are better indicators than macro trends. Copper tells us what is happening in China. S&P tells us on risk appetite. The dollar reflects the global mood. Most importantly, and with a bit of irony, he warns investors to be wary of policymakers because they guide people to be calm when inflation is about to rise. 

Boom, Busts and Market Cycles is a very insightful book. Written in a different style with conversations between two characters, Dangi is able to deliver some useful tips and advice on investing in a language that is easy to understand. One can start reading the book from any chapter and it is not necessary to go sequentially as these are standalone chapters.

He also gives his views on the economy, which can be contested by economists. He talks of inflation being high at 4%, which is higher than the Asian counterparts due to high public debt. Here data would show that high inflation has normally tended to go with high food prices which are driven by supply factors rather than demand. He is suspicious of household debt rising in the unsecured space, which he feels is not a good sign. Here, too, it is arguable whether it is a bad thing given that the NPL ratio is low. The counterview is that this has supported growth in consumption, which would have lagged in the absence of leverage.

Similarly, he believes our GDP growth will be 6% on a continuous basis. This may be too pessimistic of the growth story as 7-8% seems to be the path that can be achieved. In fact, this path can probably not convince investors of the continued good returns in the market. But then, it is the author’s view coming from someone who has been in the market for long to understand what works. But then he does end by saying that equity valuations are rich but lack macro support. This is definitely a book for the shelf as Dangi writes with conviction and strongly puts forward his views on the subject.

Economy may survive war supply shocks : Businessline 12th March 2026

 The current oil crisis is the fourth in the last four years. The first episode took place when Russia invaded Ukraine which saw crude price moving from around $84/barrel in February 2022 to $117 in March and remaining in a higher range till September, when it moderated to $90/barrel before reverting to around $80/barrel in December.

Therefore, the higher prices lasted for almost nine months. In this episode, Russia was a major supplier of oil (third largest with share of 10-12 per cent). With a ban being imposed on imports by the western community, supplies were disrupted.

The second was the Israel-Palestine conflict in October 2023 but its price impact lasted for just about a month. This is because no oil producing country was involved in this conflict.