Latest Developments

Asia
The Hindu BusinessLine

Modi’s developed-nation dream strains against India’s growth gap

India likely grew at more than 7 per cent last quarter, a pace most major economies would envy. Yet, that may still be too slow to deliver on Prime Minister Narendra Modi’s dream of a developed nation. Modi wants India to achieve that status by 2047, the centenary year of its independence from British rule. Getting there would require the world’s sixth-largest economy to grow at 9.25 per cent annually for 21 years, according to Ashok Lahiri, a senior official at the country’s apex government-run think-tank. The ambition, branded Viksit Bharat — or Developed India— has become a centerpiece of Modi’s third term. However, assuming the current rate of growth, India’s economy would fall short of his vision, according to several economists. Growth averaged 6.3 per cent between 2000 and 2024, well below the current potential rate of 7.5 per cent-8 per cent. The economy has grown at or above 9.25 per cent just three times over the past 50 years — 1975, 1988 and 2021. Achieving the target “would require an exceptionally strong and sustained acceleration in growth,” which will “become increasingly difficult as the economy expands and the base becomes larger,” said Alexandra Hermann Prasad, a London-based economist with Oxford Economics. Data Monday will likely show the economy expanded 7.3 per cent last quarter from a year ago, slowing from 7.8 per cent in the previous three months. Growth below 8 per cent could leave India vulnerable to the so-called middle-income trap, where rising wages erode a country’s low-cost advantage before productivity and skills improve enough to compete with richer economies. And the distance to high-income status is stark. India’s per-capita income was $2,813 in 2025 and would need to rise more than sixfold to around $18,000 by 2047 to cross that threshold, according to NITI Aayog’s Lahiri. There are “significant vulnerabilities,” in India’s economy, said Lavanya Venkateswaran, economist at Oversea-Chinese Banking Corp. She pointed to the country’s current-account and budget gaps as well as reliance on volatile capital inflows to finance its external balance as risks. That’s partly why the nation’s appeal among foreign investors is waning, with the Indian rupee the worst-performing currency in Asia this year so far. India replaced Indonesia as Asia’s least-preferred stock market in an August survey of fund managers by Bank of America Corp. One solution is expanding manufacturing, economists say. And, that’s on the Modi government’s agenda too, though the sector has stayed stagnant at around 16 per cent-17 per cent as a share of India’s gross domestic product for more than a decade. That’s compares with Modi’s 25 per cent aim. Economists say boosting high-tech exports, encouraging more private investment and reducing reliance on imported energy are other ways to accelerate economic momentum.

Modi’s developed-nation dream strains against India’s growth gap
Asia
The Hindu BusinessLine

Chasing global AI stocks is getting riskier by the day

The RBI Bulletin released last week revealed an interesting factoid — that outward remittances by resident individuals for overseas investments reached $457 million in June — the highest ever. Given the scale and the lure of AI trade in overseas markets, it should be a safe guess that a good part of these remittances might have been channelled into AI themed bets in the US. Clearly, AI FOMO is keeping some Indian investors up at night. After all FOMO can unnerve not just retail investors, but even large institutional investors. Take the case of GQG Capital which became famous amongst investors in India after buying into Adani Group stocks in 2023. Recently, the AMC made a complete about turn by going overweight on AI stocks after warning for around two years that AI stocks were in a mega bubble and publishing multiple reports titled calling AI bubble as ‘Dotcom on Steroids’. Its shares hitting three-year lows and investors pulling out around $15 billion from its funds due to underperformance after underweighting AI stocks in recent years could have been the last straw. Other investors feeling the pull, must take note of some important data in this context. For most American banks and insurers in the first half of 2000s, 2006 was the peak year for earnings. In the four years between 2002 and 2006, the profit of the 10 largest financial stocks by earnings (as of 2006), grew at a staggering 24 per cent CAGR—and their combined earnings accounted for about 15 per cent of the aggregate profit of S&P 500 companies for 2006. These 2 per cent stocks (10/500) were worth about 11 per cent of S&P 500 companies’ market cap then. In the backdrop of loose regulations, banks had thrown caution to the wind and took on risky, leveraged bets in the US housing market. Based on analysis of historical data the entire financial system worked on an assumption that the property market will never fall across all sates in the country at the same time. Under this assumption, the risk to mortgage bonds was deemed manageable. But when this assumption was proved wrong in 2007, everything broke loose culminating in GFC. Financials went from about 20 per cent weightage in S&P 500 at the peak before GFC (Oct 2007) to 11 per cent at the trough following the crash (March 2009). The combined earnings of top 10 financial companies declined from $118 billion in CY26 to losses adding up to $143 billion in CY28. Wachovia was folded into Wells Fargo. Cut to today, the AI trade also shows signs of an earnings bubble — only larger in scale than 2007-08. The 10 largest AI-related companies of 2026 by earnings, are estimated to post a combined profit CAGR of a whopping 44 per cent for the four-year period ending CY26. The 2 per cent of companies this time, will likely account for about 30 per cent each of the index’s profit pool for CY26 and 30 per cent of its market-cap, respectively. Here is an interesting data to note. During the 2007 market peak, the PE of S&P 500 was just 17 times, yet the index fell by more that 50 per cent as the earnings bubble burst. Today, the S&P 500’s P/E multiple now stands at a 26x – valuation level that compares with valuation at the peak of dotcom bubble of 29 times. While in the event of any stumbling block in the AI theme, the earnings may not crash like it did for the financials in 2008, it is still likely to be significant given the scorching pace at which related capex has inflated earnings for semiconductor companies. The Buffett indicator, too, is at a record high of 2.5x GDP now versus 1.3x before the GFC. It went close to 2x at the peak of the dotcom bubble. “How cash rich are the earnings?” In its results for Q2 FY27 (released last Wednesday), though Nvidia delivered a beat on earnings, its free cash flows came in a lot lower at $21.4 billion versus consensus estimate of $47.2 billion. In fact, Nvidia’s case is just an illustration of a deeper trend. Based on consensus estimates of net profit and free cash flows for 2026, the combined free cash flows of the said 10 AI stocks stand at a mere 30 per cent of their combined net profit. This ratio has significantly grown thin from about 80 per cent as of 2022 and around 100 per cent over 2018-22 on average. Saddled with over $2.5 trillion in lease obligations (yet to commence) and purchase commitments for data centre gear, the prized cash flow machines of the tech boom since 2010 are making an 180-degree turn on cash generation. Further per a Barclays analysis, OpenAI and Anthropic, together constitute 73 per cent of Amazon’s AI revenue. Similarly, they make 69 per cent of Microsoft’s AI revenue, per a Wells Fargo report. OpenAI and Anthropic are still cash burning AI labs whose moats are increasingly under threat from cheaper open weight models. The two labs also comfortably make up over 40 per cent of the revenue backlog of the hyperscalers (see graphic). In what critics of the boom call as ‘circular financing’, Nvidia and the hyperscalers infuse cash into companies like OpenAI and Anthropic, with an expectation that the money finds its way back to them, in the form of orders for GPUs or contracts for compute. Thus, while the trailing returns in AI stocks might be alluring, history has good enough lessons which if understood well will help investors not fall into the FOMO trap. An earnings bubble which is becoming more cashless amid a valuation bubble is not a difficult lesson to fathom.

Chasing global AI stocks is getting riskier by the day
Europe
BBC Business

Trump threatens 'tremendous economic consequences' on any country helping Iran

He wrote in all capital letters on Truth Social that he was launching "the most crushing economic operation ever taken against any country!" He gave no further details, and did not name any other nation. It comes after a 60-day ceasefire with Iran expired on Monday, with no sign of a diplomatic or military off-ramp to the conflict that the US and Israel began at the end of February. Trump's latest move appears to extend the pressure campaign of Operation Economic Fury, launched in April to sanction foreign banks or firms that do business with Tehran. In Wednesday evening's social media post, Trump said he was launching "economic D-Day" on Iran because the Islamic Republic had failed to make a deal with the US. "ANY country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face TREMENDOUS Economic Consequences," Trump said. Trump continued: "Oil smuggling, swap lines, cash transfers, exchange houses, ship registries, front companies - It all needs to stop NOW. You know who you are." It comes a day after the United Arab Emirates, a US ally, announced it would be severing all financial and economic ties with Iran, following a new missile threat from the country. The UAE's defence ministry said it had detected two ballistic missiles launched from Iran targeting maritime traffic, both of which landed in the sea. Iranian entities have long used Dubai's financial system to transfer money through exchange houses and shell companies. Following the UAE's decision, Iran's armed forces warned neighbouring Gulf countries against providing support to the US military, saying any assistance given to US forces would be considered collusion. While China was not named in the post, businesses there are the biggest buyers of oil from Iran, a key source of Tehran's funding. Since the start of the war, Washington has sanctioned several so-called teapot refineries - privately owned oil processing plants, mostly based in Shandong province, eastern China.

Trump threatens 'tremendous economic consequences' on any country helping Iran
Asia
The Hindu BusinessLine

When age matters

Income returns arise from dividends received from the firm whose stocks you directly hold. | Photo Credit: iStockphoto In recent times, several stocks have traded at prices that offer good dividend yield. This leads to the question: Are individuals interested in earning a dividend income? Should source of returns matter? Here, we discuss how your age determines your preference for source of returns, especially from equity investments. Equity investments, like bonds and real estate, offer two sources of returns — income returns and capital appreciation. Income returns arise from dividends received from the firm whose stocks you directly hold. You can also earn dividend income indirectly via net asset value if you invest in mutual funds. Note, this dividend income is reinvested and realised as capital appreciation if you invest in the growth option of a fund. The choice of returns depends on age. If you are a working executive, your main objective is to accumulate wealth to achieve life goals such as funding child’s education and buying a house. This tilts your preference towards capital appreciation and is tax efficient; you pay taxes only when you sell a stock in direct investments or when you redeem mutual fund units. Now, goal-based investments are typically held for more than 12 months. So, if you have earmarked these investments for a life goal, the gains are likely to be taxed at 12.5 per cent above ₹1.25 lakh in a year. This is because these equity investments will be taxed as long-term capital asset. What if you are retired? Your active income would have stopped and you now depend on passive income to meet post-retirement expenses. This means you need monthly income to support lifestyle expenses. Also, most mass-affluent retirees are conservative investors viz. they prefer to conserve capital and consume income. In such cases, they prefer to invest in monthly income bank deposits. Investing in dividend yield stocks may be preferred by some as an additional source of income. If taxes were the only consideration, then earning dividend income may not be an economical source of returns. This is because dividend income is taxed at your marginal tax rate. Yet, retirees may prefer dividend as a supplement to their interest income to meet their post-retirement expenses. In such cases, think of taxes as the cost retirees are willing to incur to consume income without drawing down their investment capital — selling shares or mutual fund units to generate cash flows. Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments. We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.

When age matters
Asia
The Hindu BusinessLine

Which Nifty is right for you?

Imagine you decide to invest in equity via an index fund. But which market are you actually buying? The 50 biggest firms? The next 50 waiting in the wings? Or, a much broader basket of 500 firms? All three are called Nifty indices, but they can give your money very different rides. So, it’s worth asking a simple question: Which one to choose? It matters because choosing an index fund is not simply a question of picking the one with more number of firms or the one with ‘bluechips’. Instead, you are choosing between how much of the market to own and where that exposure comes from. The Nifty 50 may give you exposure to 50 large firms but as of July 31, 2026 financial services alone accounted for 36.18 per cent, healthcare 4.82 per cent and power just 2.63 per cent of the index. So, the real question for an investor is: Do you want the largest firms, the next tier of firms, a broader slice of market or a sector mix you are comfortable with? What if you don’t want to bet on which part of the market will win? The Nifty 50 gives you exposure to 50 of the market’s largest firms. So, for an investor who wants to keep equity investing simple, it can be a ‘perfectly reasonable’ one-index approach. But there is an important question hiding beneath: are you comfortable owning mainly the firms that have already turned the market’s biggest or also firms that could become tomorrow’s ‘giants’? That is where the Nifty Next 50 enters the picture. If the Nifty 50 represents the established ‘giants’, the Nifty Next 50 takes you one step down the ladder, bringing in the next 50 companies outside the Nifty 50. That makes it an interesting middle ground: you are still investing in relatively large companies but moving beyond the market’s biggest names. For an investor who feels the Nifty 50 is too concentrated in today’s ‘giants’ but who does not want to straddle across the entire market, the Next 50 offers a different proposition. The next query is whether you want exposure to the next set of companies in the market-cap hierarchy or prefer the wider spread offered by the Nifty 500. What if you don’t want to pick a winner? This is where the Nifty 500 changes the scenario altogether. Instead of deciding whether the market’s biggest companies or the next tier will do better, you are spreading your exposure much further across the Indian equity market. That can appeal to an investor who does not want to make a call on which segment of the market will lead over the next 10 or 20 years. The trade-off is equally important: you are also accepting exposure to companies beyond the large-cap universe, which can make the ride different from a Nifty 50 fund. In simple terms, Nifty 50 asks you to back the ‘giants’; Nifty Next 50 gives you the ‘climbers’; Nifty 500 lets you own a much larger part of the race. There is no single universally “best” index. However, history offers a useful reality check: diversification does not automatically mean lower risk. In NSE Indices’ February 2026 Riskometer assessment, all three indices were classified as “Very High” risk, but the scores rose from 5.33 for Nifty 50 to 5.43 for Nifty Next 50 and 5.60 for Nifty 500. So, while Nifty 500 gives you a much wider slice of the market, it has not been the least risky of the three by this measure. The choice, therefore, is less about finding a “safe” index and more about deciding how much market breadth and volatility you are prepared to accept. Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments. We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.

Which Nifty is right for you?
North America
CNBC Finance

Lowe's gives muted outlook as it sees 'pressure' in home improvement spending

Lowe's on Wednesday reported mixed results as the home improvement retailer said it saw "pressure" in spending on projects. Though the company did not cut its full-year guidance, it updated its outlook to the bottom end of its prior guidance. It now expects total sales of $92 billion, compared to $92 billion to $94 billion previously, and comparable sales to be flat, versus flat to up 2%. It expects adjusted earnings per share for the year of $12.25, versus $12.25 to $12.75 previously. For the quarter, Lowe's reported net income of $2.4 billion, or $4.27 per share, roughly the same as the year-ago period. Excluding one-time factors and including tariff refund benefits, the company reported adjusted earnings of $4.40 per share. Lowe's also said tariff refunds provided an 11 cent boost to its earnings per share this quarter. The company reported total sales of $25.96 billion for the quarter, up from $23.96 billion the year prior. Comparable sales were up 0.2%, due in part to strong performance in its pro and home services sales, according to the company. Lowe's also saw a 15.7% increase in online sales, though it added that performance was partially offset by macroeconomic pressures for the do-it-yourself customers. "While the near-term remains dynamic, our teams are executing at a high level, advancing our Total Home strategy and investing to drive growth and profitability," CEO Marvin Ellison said in a statement. The earnings come as the home improvement retailer grapples with a slower housing market and a more cautious consumer. Lowe's rival Home Depot said in its earnings report on Tuesday that the company did not see customers returning to big projects and continues to operate in "frozen housing market conditions." Get this delivered to your inbox, and more info about our products and services. Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis.

Lowe's gives muted outlook as it sees 'pressure' in home improvement spending
Europe
BBC Business

CrossCountry cancels UK services after power cut

Trains across the UK have been cancelled by rail operator CrossCountry after a power cut at its control centre. The power outage started in Birmingham on Saturday and as a result, many of the systems used to manage the railway are unavailable, the operator said. Cancellations are affecting most routes, from Glasgow to Penzance and Leeds to Manchester, until further notice because of "significant and unforeseen disruption", said CrossCountry, ranked Britain's worst rail operator, in June. Passengers are venting their anger on social media, saying the situation is the "worst case scenario" at the weekend, with some taking coaches before continuing their train journey with another operator. Major routes between Manchester and Birmingham, which passes through Stoke-on-Trent, Coventry and Wolverhampton, along with routes from Leeds to York, Cheltenham to Cardiff and Glasgow to Edinburgh, are all affected. Fans travelling to football fixtures have been warned that services to and from Manchester, Liverpool and Newcastle might be "extremely busy". One passenger, posting on X, said: "A massive thank you to Cross Country Trains for cancelling my train this morning to Birmingham. You are truly not fit for service. You have also cancelled my train coming back but that is immaterial. Useless. Utterly useless." Services to Plymouth and Penzance are also disrupted with customers relying on Great Western Railway operators as a replacement. "We are working closely with relevant partners and will provide further updates as soon as possible," a CrossCountry spokesperson said. At New Street station, the barriers to all platforms are open and there are regular announcements to passengers about the disruption. The digital boards in the concourse are carrying a Special Notice to warn passengers of the cancellation to CrossCountry services. While the operator usually calls at more than 100 stations, it said that the only route expecting a "near-normal" service was between Peterborough, Cambridge and Stansted Airport.

CrossCountry cancels UK services after power cut
Europe
BBC Business

Mayors to get powers to overrule local councils on planning decisions

Image source, PA MediaByKate Whannelpolitical reporter Published23 August 2026, 04:10 BSTUpdated 1 hour agoMayors across England will be given new powers to overrule local councils on some planning decisions. The change would apply to proposals with more than 150 homes, more than 15,000 square metres of commercial space or buildings over 30 metres. Mayors in 13 areas including Manchester, Liverpool, the West of England and the West Midlands will gain similar powers to Sir Sadiq Khan in London, who is already able to "call in" planning decisions. Housing minister Matthew Pennycook said the powers were an "essential part of the toolkit that mayors need to effectively deliver new homes and regeneration". The Conservatives questioned whether it was right for councils to lose the "ability to make planning decisions in their own communities". The powers will also be available to mayors in the Combined Authorities in North East England, South Yorkshire, West Yorkshire, York and North Yorkshire, Hull and East Yorkshire, Greater Lincolnshire, Cambridgeshire and Peterborough, East Midlands, and Tees Valley. Paul Bristow, the Conservative mayor of Cambridgeshire and Peterborough, told BBC Breakfast that if he had local powers, he would approve "tomorrow" a couple of blocked schemes that he said would "get new homes built that families could move into and charge economic growth". Bristow said "it's not about overriding what local people want", but about developers and councils finding a compromise on projects instead of just saying no - which he believed the "perceived threat of intervention" would help. In London, where Khan already has the power to review decisions on certain developments, external, housebuilding has fallen in recent years. But Pennycook insisted the "call in" powers had helped the mayor "unblock strategic growth sites" in the capital. Bristow said if he had a similar local plan it would be "much more light touch" than London. In the 2024 general election, the Labour government promised to build 1.5 million homes in England by the end of the decade, but housebuilders have warned the target could be missed. Pennycook said the government was "absolutely determined to stick with that ambition".

Mayors to get powers to overrule local councils on planning decisions
Asia
The Hindu BusinessLine

What should investors do about Pricol’s shares after the recent rally

We had given an ‘accumulate’ call on automotive instrument cluster leader Pricol, about a year ago. Its shares were trading at ₹460 then. Now they trade at ₹770, at about 6 per cent below the all-time high of ₹822 hit on August 20, 2026. At current price, the stock has delivered returns of almost 70 per cent since our call. Business and earnings have expanded strongly in FY26 and in Q1 FY27, supported by robust vehicle demand following GST rationalisation. Pricol’s recently acquired (late FY25) business of polymer products is doing as well as the core business. The company has won multiple orders to supply instrument clusters to some of the best-selling models in the market. Capital expenditure of about ₹700 crore is also in the pipeline (for perspective, fixed assets turnover ratio was around 4x in FY26). Besides, Pricol’s board has also approved the demerger of the instrument cluster business (DICVS) from the other businesses, and this may have some potential to unlock value. All in all, the future looks promising for the company. The stock now trades at 35x trailing earnings and at about 22x based on our estimated earnings for FY28. The valuation is not expensive per se, given the growth opportunity. However, considering the prevailing macro pressure on equities and the inherent cyclicality of the auto sector, we believe there is a good case for risk-averse investors to pocket some of the gains and retain the rest to participate in any future upside that may be left in the stock. Before proceeding, here’s a refresher on Pricol’s business. The company has three verticals namely, driver information and connected vehicle solutions (DICVS); actuation, control and fluid management systems (ACFMS); and the recently acquired precision products vertical (P3L or polymer business). The three verticals account for roughly 60, 20 and 20 per cent of revenue. Under DICVS, the company manufactures LCD and TFT-based instrument clusters, fuel level sensors and telematics. Under ACFMS, it manufactures oil, fuel and coolant pumps, disc brakes and handlebar parts such as switches, brake/clutch levers. Under P3L, it manufactures engineered plastic parts that find use in body panels and dashboards among others. Pricol reported strong revenue and profit growth of around 50 per cent each in FY26. Three-year compounded growth (between FY23 and FY26) of revenue and profit work out to 27 per cent and 35 per cent, respectively. As the effect of the acquisition faded, revenue and profit growth moderated to 23 per cent and 35 per cent in Q1 FY27 — which is still strong. Though Q1 EBITDA margin appears to be in line with that in FY26, management revealed that it came under pressure. The West Asia crisis led to a spike in input costs, particularly for polymers, LPG and freight. The ongoing AI mania sent prices of chips and child parts used in instrument clusters soaring. Given the higher scale of operations in the quarter, management admitted the lost opportunity of achieving EBITDA margin of up to 2 percentage points more than what was reported. This may be the case in FY27, as long as the supply crunch prevails. However, a part of this inflation is recoverable from OEM customers. Further, Pricol had tied up with Hong Kong-based BOE Varitronix to backward integrate the production of TFT backlight modules. The production of these modules will likely begin towards the end of FY27 and aid margin from FY28. Over the last two years, Pricol has won orders to supply instrument clusters and other parts for some of the best-selling models. These include Tata’s Sierra, Punch, Tiago and Altroz, TVS’ Jupiter, Ntorq and iQube, Suzuki’s Access, Bajaj’s Chetak, 3-wheelers and its Pulsar range. Since acquiring the polymer business from the TVS group, which largely served the TVS Motor Company, Pricol has onboarded new customers including Ather, River, Raptee, Simple Energy, Honda and Royal Enfield, with a Yamaha deal in closing stages. However, that business is currently constrained by capacity . This has even led to the company turning down a few deals that came its way. Along with a capex allocation of ₹300 crore for DICVS and ACFMS verticals, it has allocated ₹400 crore for the P3L vertical. This ₹700-crore capex is expected to be incurred over the next 18-24 months. Once completed, management expect the P3L vertical should be capable of generating a maximum revenue of ₹2,000 crore a year, from about ₹870 crore in FY26. Revenue from the fairly new disc brakes and switches under ACFMS is expected to ramp up from FY28. Pricol currently supplies disc brakes to an Indian OEM, though. Overall, the management is upbeat on outgrowing the underlying auto market and is looking to double revenue to ₹8,000 crore by FY31. In late June, Pricol’s board approved the spin-off of the DICVS vertical into ‘Pricol Autotech’. Shareholders will receive one share of Pricol Autotech for every share in Pricol. Key stages such as approval of NCLT and shareholders are pending. The demerger is expected to be complete in the next four quarters. Today, the instrument cluster is a rapidly evolving product. It now integrates entertainment, navigation, over-the-air updates and climate control besides vehicle information. A three-screen ‘coast-to-coast’ setup is a common sight these days. Though Pricol is capable of manufacturing such ‘e-cockpits’, market leaders such as Continental, Nippon Seiki and Visteon operate on an exponentially higher scale. This limits Pricol’s ability to procure child parts cheaply. The management believes the demerger can help onboard tech partners who can also share business with Pricol alongside other benefits such as focused decision-making, capital allocation and value unlocking.

What should investors do about Pricol’s shares after the recent rally