How the paradigm of power is shifting

For much of modern history, power was mostly measured by military strength. Borders shifted through conquest, and influence was enforced through force.

In the past couple of decades, there has been a gradual shift in this paradigm. While military capability still matters, the primary instruments of power today are economic and technology.

In the contemporary world, access to capital, technology, markets, and resources often determines outcomes more effectively than armies. Trade rules can shape behavior. Financial sanctions can immobilize economies. Control over technology standards can define the future of entire industries.

Unlike traditional warfare, economic power operates quietly. There are no declarations, no battlefields, and no formal endings. Yet its effects can be just as lasting. The latest events in Venezuela also need to be looked at from this Lense.

Export controls, tariffs, financial restrictions, and regulatory barriers are now routine tools of statecraft. They are justified as measures of national security or economic protection, but they also create dependencies and asymmetries. Countries that control key nodes—finance, energy, technology, or logistics—gain leverage over others.

This does not resemble old-style colonialism. There is no direct rule or occupation. Instead, influence is exercised through terms of access.

Who can trade? Who can borrow? Who can build?

From an economic perspective, intent matters less than outcomes. When countries or firms are forced to align behavior to retain access, power has been exercised—whether or not it is acknowledged as such.

The replacement of military power with economic power has not made the world more peaceful. It has made conflict less visible, more persistent, and harder to resolve.

Understanding this reality is essential for anyone trying to assess long-term risks in a changing global system.

For markets, this shift has important implications. Economic decisions are no longer evaluated purely on cost and efficiency. Political alignment, regulatory risk, and strategic sensitivity increasingly shape investment outcomes.

The conventional principles of economics that advocate efficient use of factors of production to maximize economic output are being overlooked for strategic reasons. The developed countries like the US, which outsourced manufacturing function to the more populous countries (lower wage cost) and resource rich countries (lower logistic cost) are aiming for relocating their industrial ecosystem onshore.

In view of this shift, India has two choices to make. One, to focus on fiscal discipline and compromise on capex or increase capex and let the deficit stay high. Two, carve out a space of its own in the emerging multipolar global order, or chose to become a vassal state of one of the major powers. These choices will define the investment opportunities available for the Indian investors.

India’s AI Moment: A ±5 million job swing by 2031

(Photo Credit IET)

AI (Artificial Intelligence) is no longer a future disruptor—it’s already reshaping how the world operates. For India, a country with 10–11 million tech and customer experience (CX) workers, the stakes are unusually high. AI is already reshaping how India codes, tests, designs, supports, and runs digital work. India’s millions of Tech and CX workers are at the threshold of a major transition to a future that is full of historic new opportunities and risks.

The latest report published by NITI Aayog “Roadmap for Job Creation in the AI Economy” (NITI Aayog–BCG–NASSCOM), delivers a clear message- AI can either shrink India’s tech workforce sharply by 2031—or expand it dramatically. The outcome depends entirely on what India does next.

Here are the key points highlighted in the report.

The Stakes: A ±5 Million Job Swing by 2031

India faces two sharply diverging paths:

If India does nothing:

Tech workforce drops from 7.5–8M → 6M

CX workforce drops from 2–2.5M → 1.8M

If India acts decisively:

Tech workforce grows to 10M

CX workforce grows to 3.1M

This is not about technology alone. It's about policy, skilling, and national coordination.

What AI Is Changing (Fast)

Work

AI boosts productivity across the tech value chain:

·         Code generation: +15–25%

·         Testing & documentation: +20–50%

·         Overall SDLC: +10–20%

·         CX automation: Handles majority of L1 queries

·         Routine, scalable tasks get automated first.

Worker

At risk

·         Junior QA engineers

·         L1 IT support

·         Basic CX representatives

Evolving

·         Full-stack developers

·         Data engineers

·         Cloud DevOps

·         Cybersecurity roles

·         New roles created:

·         Prompt engineers

·         AI architects

·         Ethical AI specialists

·         Quantum ML engineers

·         LLM researchers

Workforce

The pyramid compresses:

·         Fewer entry-level roles

·         Faster ramp-up

·         More judgement-led work

·         Leaner teams

·         Higher skill premium

India’s Three Big Vulnerabilities

Job Displacement Risk

·         60% of formal-sector jobs face automation risk.

·         Entry-level roles are most exposed.

Weak AI Talent Pipeline

·         Limited CS in schools

·         AI curriculum lags global benchmarks

·         Falling share of AI patents & citations

AI Talent Shortage

·         India meets only 50% of AI talent demand

·         Net negative migration of top AI researchers

·         Demand growing 25% CAGR

·         India is rich in talent, but not yet in AI-ready talent.

The Playbook: The India AI Talent Mission

A single, unified, all-of-government mission to make India the world’s AI talent capital.

Embed AI from school to university

·         Universal CS education

·         AI + X degrees

·         Scale AI PhDs

·         Faculty-industry exchanges

Make India a global AI talent magnet

·         AI Talent Visa

·         Competitive grants

·         Returnee researcher programme

·         Tier-1 AI Centres of Excellence

Build a national AI reskilling engine

·         AI Masters for working professionals

·         Sector-specific reskilling (IT, CX, BFSI, healthcare)

·         Large-scale AI literacy (PMKVY/NAPS)

Two Critical Enablers (with IndiaAI Mission)

·         Open-Source AI Commons

Public datasets, models, benchmarks

·         National Compute Grid

Affordable GPU access for students, startups, universities

Remember: Without compute + open data, talent simply migrates abroad.

The Bottom Line

AI can make India a global AI workforce hub or a net job loser

The difference rests on speed, scale, and strategic coordination.

India has the people. AI gives them leverage. A national mission gives direction.

The next 4–6 years will decide whether we ride the AI wave—or get swept under it.

Following the Custom: Balancing Faith and Fundamentals

Each Diwali, as lamps light up homes, optimism lights up Dalal Street too.

It’s that time of the year again. Business channels are abuzz with market commentators dressed in their festive best, sharing their annual outlooks on the economy and equities. Almost by ritual, hope dominates the narrative — and that’s not necessarily a bad thing.

This year, with investor sentiment subdued and global uncertainties still clouding the horizon, a measured dose of optimism may be just what the market needs. Continuing the custom, here’s a closer look at what could turn favorable for Indian markets over the next one year — and what investors should keep an eye on.

Domestic Drivers: The Spark Within

Consumption revival on the horizon

After three years of subdued consumption, several catalysts are now aligning. Rationalization of income tax and GST rates, material lending reforms by the RBI, a supportive rate environment, and a good monsoon could together revive private consumption demand. The upcoming pay-commission payouts may add further fuel, particularly in semi-urban and rural markets.

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Capex momentum building up

The long-awaited private investment cycle seems to be stirring beyond government-led initiatives. In the past six months, Indian corporates have announced new projects worth ₹9.35–9.95 lakh crore, marking a 30–37% year-on-year increase — the second-highest level in 15 years for the April–September period.

The new investments span data centers, defense manufacturing, semiconductors, mining, power transmission, and battery storage — sectors that could structurally strengthen the domestic supply chain.

If these plans translate into execution, they could lift capacity utilization levels, spur employment, and improve corporate earnings visibility over FY27–FY28.​

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Global Tailwinds: Winds Turning Favorable

Energy and trade outlook brightening

Global energy prices are projected to ease in 2026 as demand growth moderates and logistics costs normalize. An eventual increase in OPEC production could add downward pressure.

Simultaneously, the finalization of trade agreements with the EU, the U.S., and other major partners could stabilize India’s current account and lend support to the rupee.

Foreign flows stabilizing

After months of heavy selling, foreign investors’ outflows are slowing. Several global brokerages have highlighted that after underperforming global peers for a year, Indian equities are re-entering attractive valuation zones.

Structural Shifts: Productivity & Valuations

AI and efficiency gains

While still in early stages, AI-led productivity improvements may begin reflecting in corporate bottom lines from FY27 onward — particularly in IT services, logistics, and manufacturing automation. The initial phase could boost operating margins and asset utilization ratios.

Valuations moderating to reasonable levels

Indian equities have corrected modestly from their 2023 peaks. The Nifty 50 forward P/E now stands around 18.5×, roughly 10% below its five-year average.

With earnings expected to grow in double digits through FY27–FY28, select large-cap names look increasingly compelling from a risk-reward standpoint.​

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Cautionary Note: Risks Beneath the Diyas

Every Diwali brings hope, but this year’s optimism must be tempered with realism. A few watchpoints remain:

Fiscal balance: Pre-election spending or subsidy pressures could test the fiscal glide path.

External vulnerabilities: A sudden oil price spike or renewed global conflict could alter India’s macro assumptions.

Execution gap: Investment announcements often lag actual implementation; sustained follow-through will be critical.

AI hype vs. reality: Productivity gains may take longer than expected to reflect at scale.

Geopolitics: Even as ceasefire talks progress in the Middle East, tensions between major powers remain fluid.

A balanced investor would acknowledge these risks even while celebrating the improving trends.

Conclusion: The Glow of Disciplined Optimism

Diwali has always symbolized renewal — of faith, fortune, and perspective. This year, as India stands on the cusp of a consumption revival and a capex upcycle, optimism has reason to exist.

Yet, faith alone does not light the path forward — fundamentals do. The coming year could reward investors who practice disciplined optimism: staying invested in quality, avoiding exuberance, and letting conviction — not celebration — drive portfolio choices.

From today, I am taking my Diwali break. My next post will be on Monday, the 27th October.

Wishing all the readers a very Enlightening, Blissful and Joyous Diwali. May the Mother Supreme destroy all the darkness and sorrow from our lives and guide us to the path of enlightenment and divine bliss.

Time to take out your umbrellas

A consistent rise in global equity prices, not accompanied by a matching earnings growth, has raised concerns about the sustainability of current valuations. In particular, the tech sector valuations in US technology have raised alarms. Several reports have highlighted that the market conditions and investors’ sentiments bear a stark resemblance to the dotcom exuberance (1999-2000) period, and as such markets may have already crossed the fairness redline and moved over to the realm of bubble. ​

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In this context, I would like to draw readers’ attention towards two particular reports that I find representative of the analysis advising caution.

“Dotcom on Steroids” by GQG Partners.

First report, titled “Dotcom on Steroids” has been published by GQG Partners, USA. This report draws parallels between the current AI-driven tech boom and the dotcom bubble of the late 1990s, warning of similar risks ahead. The report postulates-

“Today's market, particularly in the tech sector, exhibits dotcom-era overvaluation, with lofty multiples, slower earnings growth, and a weaker macroeconomic backdrop, in our view

We believe today's technology sector no longer represents forward-looking quality due to decelerating revenue growth, collapsing free cash flow, and increasing competition.”

The S&P 500 today trades at 23x TMF EPS—nearly the same as in 2000, but with slower growth (10% vs. ~18% without any stimulus then). Most tech stocks already trade at 1999-like multiples, unlike 1999’s budget surplus, the U.S. now faces fiscal deficits, weakening the backdrop.

The key points analyzed in these reports are as follows:

Rising Capital Intensity

Big Tech’s capex now consumes 50–70% of EBITDA (similar to past telecom and energy bubbles). This undermines the old thesis of tech as “hyper-scalable” with minimal investment.

·         Microsoft in 1999: traded at 60x earnings with 35% revenue growth, but took 15 years to recover from the crash.

·         Cisco: once the largest company during the internet bubble, driven by over-optimistic growth projections—similar to Nvidia today.

·         Today’s valuations (Nvidia, Palantir, ServiceNow) resemble bubble-era extremes.

Penetration driven growth hitting peak

“Most of today's Al capital expenditures are funded by advertising revenue. Digital advertising now accounts for more than 70% of all advertising, so the penetration-driven growth story could be approaching its peak. Morgan Stanley expects the US digital ad industry to grow at a 9% compound annual growth rate (CAGR) from 2025 to 2030-less than half of its 20% CAGR between 2014 to 2019.”

·         Heavy dependence on AI-related capex funded by cyclical advertisement revenues makes growth fragile.

·         Analysts fear AI giants may be this generation’s “Nifty Fifty”—dominant but overpriced.

Competition landscape changing

During the 2010s, big tech was dominated by monopolies, e.g., Amazon dominated e-commerce, and Google dominated search. This not valid today. All big companies directly compete against each other in the same space. Cloud market is a good example of the deteriorating competitive landscape. This was once a stable three-player market: Microsoft, Amazon, and Alphabet. However, a disruptive fourth player (Oracle) just entered in a big way and is explicitly undercutting peers on pricing by 40%. Adding to the shakeup, CoreWeave-a financially constrained fifth player with an arguably more cutting-edge product-has announced its intention to aggressively gain market share through pricing pressure.

Big tech is now incumbent not disrupter

In the 2010s, big tech were the disruptors. Today, big tech is the incumbent, while Al is emerging as a highly disruptive force. AI winners would be known only a decade or more later, just like the internet era winner (Meta, Google) was declared several years after the bubble burst.

Conclusion: Tech is no longer uniquely superior in growth; risks of poor investment outcomes are high if bought at inflated prices.

Voltage too high, be cautious, Ambit Capital

Second report titled, “Voltage too high, be cautious”, by Ambit Capital, India, cautions that near term growth in the electrification of India theme are more than priced in, but the mid-term risks like risks (slowing demand, BESS substitution, subsidy phase-outs, rising global competition) are not yet considered. It argues that better opportunities may exist outside the tech sector with lower risk and similar returns.

·         Post-Covid electrification boom (driven by transmission & distribution demand) created supply-demand gaps and high margins for equipment makers. But these conditions are peaking. Risks are rising beyond FY28 as growth slows, competition intensifies, and margins normalize.

Demand–Supply Outlook

·         HV transmission equipment is currently undersupplied, but heavy capacity expansions (transformers, switchgear) will narrow the gap in 2–3 years.

·         National Electricity Plan (NEP) targets show >30% decline in installations in FY27–32 vs FY22–27.

·         Battery Energy Storage Systems (BESS) will reduce the need for fresh transmission infra post-2028.

·         Private capex remains muted (capacity utilisation ~75%).

·         PGCIL capex plan accelerates till FY28, then flattens.

Execution Risks

·         Land and regulatory delays already caused FY26 targets to be cut.

·         Order growth likely to peak in FY26–27, then plateau.

Policy Risks

·         Gradual removal of ISTS waivers (inter-state transmission subsidies) will raise RE project costs and reduce transmission demand.

·         Shift toward intra-state RE sourcing could hit long-distance transmission growth.

Competitive Landscape

·         Local subsidiaries of MNCs like ABB, Siemens, Siemens Energy gained share recently, but global majors (Schneider, WEG, Nidec, Eaton, Delta) are scaling up aggressively. Schneider, in particular, is expanding 2.5–3x capacity in India.

·         Export contribution shrinking for most domestic players.

Margins & Returns

·         Margins peaked in FY24; price growth moderating.

·         RoCE expected to decline.

·         Multiples corrected from Sept/Oct 2024 but still downside risks persist.

These two are only representative reports. I find several such cautionary reports on the rising (and unsustainable) high valuations, slowing growth, rising household (retail) exposure to these high valuation stocks and sectors, elevated macro concerns and explosive geopolitical conditions.

As has been the case on every previous occasion, most market participants appear to be believing that they still have some distance to cover before this bubble burst, and they will be able to “exit’ well in time – regardless of the fact that it has never happened in the past.

In my view, the US market bubble is within striking distance of the needle. Obviously, every market in the world will feel the tremor, whenever the US tech bubble bursts. India may be no exception. However, India is much better placed this time compared to 2000, because the Indian markets have been underperforming the global markets for the past one year, FII holdings is now at lowest level since the global financial crisis, speculative activities have reduced materially due to consistent regulatory intervention, Indian markets have insignificant exposure to high-tech sectors like AI, Cloud, semi-conductors etc., and a large part of Indian markets is still reasonably valued (though not cheap).

More on strategy for the Indian markets, next week.

Also read

Dark clouds gathering on the horizon – 1

Dark clouds gathering on the horizon - 2

Living with hubris

For decades, the United States has held a unique place in the global imagination — as the land of opportunity. Its greatest strength may not lie in military might, financial depth, or diplomatic reach, but in its remarkable ability to attract and absorb the best minds from across the world — including from adversarial or war-torn nations.

The most striking evidence of this is visible in America’s talent pool. Professionals of foreign origin — Indian, Chinese, Iranian, German, and more — dominate leadership roles across top corporations, academic institutions, legal systems, research labs, and even sensitive government-linked establishments like NASA. Many of these individuals come from countries that have historically suffered at the hands of U.S. military or economic policy — yet they thrive in the American ecosystem, contributing to its innovation, productivity, and geopolitical leverage.

This magnetic pull continues despite periodic political rhetoric against immigration, restrictions on student visas, and debates around birthright citizenship. Talented people, especially in emerging fields like artificial intelligence (AI), continue to gravitate towards the U.S. in pursuit of better opportunities and freer expression.

Global AI brain drain

Take, for instance, the migration of AI professionals. Between 2019 and 2024, over 12,000 Indian AI researchers relocated to the U.S., according to migration and academic datasets — second only to Iranian researchers. Over 90% of AI PhD graduates from U.S. institutions have stayed back to work in American academia or industry. Many of these individuals were educated at premier Indian institutions like the IITs, whose costs are borne by Indian taxpayers.

China, however, seems to be bucking this trend. In 2019, only 10% of top-tier Chinese AI researchers remained in China after graduating. By 2022, this figure had grown to 26%, thanks to improving domestic research infrastructure and better-funded universities — six of which now rank among the top 25 globally for AI research.

This trend might just be the beginning. Recently, Canadian mathematician Joshua Zahl, credited with major advances on the century-old Kakeya conjecture, announced his move to Nankai University in China as a full-time chair professor. If such high-profile migrations become common, it would mark a structural shift in the global knowledge economy — one that the U.S. may no longer dominate unchallenged.

Opportunity as a national strategy

What sets the U.S. apart is not just that it welcomes immigrants, but how it integrates and enables them. Many other nations — Australia, the UK, Canada, Germany, and France — have also absorbed millions of immigrants over the past three decades. Yet, none have reaped the economic and strategic benefits at the scale the U.S. has. One reason could be that these countries often pursued immigration for social balancing (aging population, refugee resettlement) while the U.S. positioned itself as a platform for economic opportunity and personal advancement.

This distinction is critical.

India’s blind spot

India, meanwhile, continues to suffer from an unchecked exodus of both talent and wealth. Not only do our brightest minds — trained at the cost of the exchequer — leave in search of better prospects, but increasingly, our wealthiest families are choosing to settle abroad, relocating their capital and potential job-creating capacity with them.

While we celebrate our ancient heritage, digital prowess, and rising geopolitical clout, the hard truth remains: India is still not seen as a land of opportunity — neither by outsiders nor, tragically, by its own elite. We are yet to hear of a rich or highly skilled professional choosing India as their destination of aspiration.

This is not just a branding issue; it is a systemic failure. From bureaucratic hurdles and inconsistent policy to inadequate research funding and a stifling regulatory climate, we are often indifferent — if not hostile — to the very people we need to retain or attract.

Time for radical rethinking

The continued erosion of India’s human capital advantage must not be dismissed as collateral in a globalized world. It is a serious strategic risk. We need a radical rethinking of our talent, research, and immigration policies — including steps like:

·         Creating elite research institutions with global faculty and unrestricted funding

·         Offering residency and startup incentives for global entrepreneurs and returning Indians

·         Reforming academic governance and expanding autonomy

·         Reimagining urban centers as global innovation hubs, not just tech parks

It’s time we recognize that global competitiveness today is not just about trade or missiles — it's about minds. And talent goes where it feels valued, not just needed.

In the classic Hindi film Sahib, Biwi Aur Ghulam (1956), the old aristocracy is shown flying pigeons while their estates crumble around them. There’s a metaphor in that. India must not fall into the trap of living with hubris, celebrating ancient glories while losing out on the future.

(Note: This post has been edited with the help of ChatGPT)

1H2025 – Markets demonstrated lot of resilience and character

 1H2025 was marked by stressful events, high volatility, and uncertainty. In geopolitics, several conventions were breached and new doctrines established. The war between Russia and Ukraine continued. India and Pakistan had a brief but intense conflict. The US entered the Middle East (Israel-Palestine) conflict by attacking Iran.

Climate wise, India had a mild winter followed by a mild summer, impacting crops. Europe continued to witness warmer weather, while the US, Canada, UK, Korea and several other countries in Africa witnessed intense and widespread wildfires, causing immense damage to the climate, lives of people and economy.

Politically, the US witnessed one of the most boisterous power transitions with Donald Trump taking over as the President (POTUS). He started his second term in the White House with radical changes in immigration, trade, and climate change policies. This put the US administration on the path to confrontations with citizens, judiciary, major trade allies (e.g., Japan, EU and China), strategic partners (E.g., Mexico, GCC, Canada and India). Towards the end of 1H2025, however things appear somewhat calming and progressing towards sustainable resolutions. The process of developing a new world order based on new ground realities and future prospects took a few more strides.

Technologically, Artificial Intelligence (AI) entered the lives of common men with Google and X (Formerly twitter) launching their user-friendly models. China launched DeepSeek to compete with ChatGPT (Open AI) and most social media platforms, search engines, financial and other services providers, integrating some sort of AI interface for the users.

Markets were volatile as the forces of hope and fear took turns to dominate the participants’ sentiments. In the end, the forces of hope appear to have emerged stronger. Most markets have recovered their losses and are progressing well on the path to growth.

In India, the economic growth returned to the normal pre-Covid trajectory, as the base effect of FY20 and FY21 low growth tapered off, and external challenges mounted. Equity markets settled close to their all-time high levels recorded in 3Q2024.

The following are some of the highlights of the performance during FY25.

Equity Markets

The Indian equity market managed to end 1H2025 with strong gains, despite yielding negative returns for three out of the six months. Indian equities performed in line with the European and US equities. The benchmark Nifty yielded a return of ~8% (9% in USD terms), which was better than the US markets (S&P500 +6%), Japan (Nikkei +1%) and Europe (Stoxx600 +7%) but much lower than South Korea (KOSPI +20%), Brazil (BOVESPA +14%) and Germany (DAX +20%). The valuation premium of Indian markets to the other emerging markets therefore remained elevated.

Financials saved the day for Indian benchmark indices

The benchmark Nifty (+8%) sharply outperformed broader markets (NSE500 +5.5%, Midcap Nifty 100 4.4%, Smallcap Nifty 100 +1.6%). The gains in benchmark indices were mostly led by banks (Nifty Bank +12.7%). Overall market cap of NSE was higher by 4.6%.

Sector-wise, Financials, Private Banks, Infra were top outperformers. IT Services, Realty, Pharma, FMCG, Energy were notable underperformers. Micro-sector-wise, Defense, Capital Markets, Healthcare, Fertilizers were outstanding. Renewable energy and real estate builders were notable losers.

1H2025 witnessed 3/6 negative months

The benchmark Nifty50 yielded negative month-on-month (MoM) returns for three out of six months in 1H2025. April was one of the best months ever for Nifty, yielding a gain of 16% MoM. The market breadth was negative in three out of six months implying much higher volatility in the broader markets.

Institutional flows positive

Over institutional flows were materially positive for 1H2025. Net domestic and foreign flows in the secondary equity market amounted to Rs2630bn. Foreign Portfolio Investors (FPIs) were however net sellers of Rs945.36bn in the secondary market, while domestic institutions pumped in Rs3575.75bn. On an encouraging note, FPIs were net buyers in the last four months of 1H2025. The nifty-institutional flow correlation was very weak in 1H2025.

Debt and Currency Markets

Indian debt and currency markets were volatile in tandem with the global trend. The benchmark bonds managed to close 1H2025 with decent gains, the long-dated bonds were lower. USDINR ended almost unchanged, but EURINR, JPYINR and GBPINR were materially weaker.

RBI cut the policy rates by 100bps and Cash Reserve Ratio for commercial banks also by 100bps during 1H2025. The benchmark 10-year treasury bond yields eased to 6.31% from 6.80% at the beginning of the year. Lending and term deposit rates were lower by up to 10-25bps. The yield steepened sharply.

The RBI maintained its policy stance to “neutral”. The liquidity position remained comfortable with RBI conducting OMOs to keep the system liquidity in surplus. The credit growth continued to decline; however, there are signs of corporate credit demand picking up. Overnight and call money rates cooled ~50bps.

Economic conditions

4QFY25 GDP growth (+7.4% yoy) came sharply higher than the estimates. The consensus estimates for FY26E GDP growth however remain pivoted to ~6.5%. CPI Inflation mostly remained within the RBI’s tolerance band of 4-6% and has recently breached on the lower side. Core inflation has also eased. Real rates have mostly remained in positive territory during 1H2025. Fiscal deficit continued to decline. The private sector investments failed to gather the desired pace, despite several government incentives. The government capex showed some improvement in 1H2025. External conditions remained stable during 1H2025 despite geopolitical conditions remaining volatile. Lower trade helped the current account balance. However, BoP was briefly negative. RBI replenished most of its USD reserves, expended to support USDINR earlier in the year.

Commodities

1H2025 was a mixed period for commodities. Precious metals (Gold +26%, Silver 23%) and Copper +12.8, recorded good gains, while energy (Brent Crude -11%, Coal -12%), other metals (Steel -10%, Zing -8%) and soft commodities (Sugar -16%, Corn -11%) ended the period with strong losses.

Crypto shine

Cryptocurrencies further strengthened their position with material rise in trading volumes and market capitalization. Bitcoin ended the period 1H2025 with a strong 14% gain. More jurisdictions accepted cryptocurrencies as a valid medium of exchange, financial asset and/or tradeable asset.