PodcastJune 2, 20269 min readyoutu.be

Oil Shock Vs AI Boom: What Happens To Indian Stocks Next? | 2 Jun 2026 | Govindraj Ethiraj | The Core Report

Govindraj Ethiraj: Host & Veteran Financial Journalist [00:00:02]
DK Joshi: Chief Economist, CRISIL [00:05:10]
Gorang Shah: Market Expert, Geojit Financial Services [00:15:36]

References

Original source (youtu.be)

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Jun 2, 2026

Investing in a Divergent Economy | 1 Jun 2026 | Notes on the Week Ahead | David Kelly | J.P.Morgan

In his report "Investing in a Divergent Economy," Chief Global Strategist David Kelly outlines how the U.S. economy is currently defined by significant, growing disparities that mask a stable "average" economic path. Dimensions of Economic…

Jun 2, 2026

Falling Yields Reinforce Equity Market Resilience | June 1, 2026 | Professor Siegel Weekly Commentary | WisdomTree

Professor Siegel maintains a constructive and optimistic outlook on the equity markets, highlighting their ongoing resilience. This positive backdrop is driven by a combination of easing Treasury yields, a recent dip in oil and gasoline pr…

Jun 2, 2026

RBI Needn’t Hike Rates; Must Nudge Capital Flows By Bearing Hedging Cos Of ECBs: Chetan Ahya | 2 Jun 2026 | CNBC-TV18

Host: Latha Venkatesh Guest: Chetan Ahya Chief Asia Economist, Morgan Stanley Event Date: June 2, 2026 Ahead of RBI Monetary Policy Announcement on June 5, 2026 1. The monetary policy & exchange rate debate Rate hike rejection: 00:01:07 ht…

The FPI vs. DII Tug-of-War: Market expert Gorang Shah (Geojit Securities) outlined a massive structural shift in liquidity [00:15:36]. Foreign Portfolio Investors (FPIs) have been relentlessly offloading Indian equities for 18 months, starting from October 1, 2024, continuing through the entirety of 2025, and extending into 2026 [00:15:56]. FPIs sold $50 billion over the last 18 months, including a $3.5 billion exit in May 2026 [00:15:26]. From January 1, 2026, to date alone, FPI net selling has exceeded ₹2 lakh crores [00:16:40].
Domestic Resilience: Despite this historical capital flight, Indian markets have corrected only 18% to 20% from their all-time peaks [00:17:16]. Shah pointed out that any other emerging market facing capital flight of this scale would likely be down 40% to 50% [00:17:04]. This resilience is driven by Domestic Institutional Investors (DIIs) fueled by record-high retail Systematic Investment Plan (SIP) inflows and a broader cultural shift from a short-term trading mentality to long-term investing [00:16:18].
Other Market Characters: Host Govindraj Ethiraj raised the role of family offices, large corporate houses, and MNC parents [00:18:00]. Shah clarified that while parent companies have occasionally liquidated large stakes (e.g., Whirlpool), these actions are sporadic block trades rather than the continuous, trend-defining flows seen with FPIs and DIIs [00:18:25].
FPI Headwinds & Triggers for Return: FPIs remain heavily underweight on India due to three prominent macro vulnerabilities: 80% dependence on imported energy, a depreciating rupee, and a deteriorating monsoon forecast [00:20:01]. Furthermore, capital has rotated out of India into cheaper emerging markets such as China, Taiwan, and Malaysia due to stark valuation differentials [00:21:01]. FPI flows may return if Q1 and Q2 FY27 earnings show that the geopolitical impact is milder than estimated [00:21:18], and markets will closely monitor potential policy adjustments mentioned by Finance Minister Nirmala Sitharaman to attract global capital [00:21:36].
Sectoral Breakaway Themes: Clear divergence is visible across sectors based on crude movements [00:21:59]:
- Crude-Sensitive Pockets: High oil prices directly boost upstream oil exploration players like ONGC and GAIL, while severely depressing downstream Oil Marketing Companies (OMCs), the paint industry, and tyre manufacturers [00:22:14].
- Defensive Shields: IT, Pharmaceuticals, Healthcare (Hospitals), Power Generation, and Telecom providers remain fundamentally insulated from oil-driven shocks [00:22:39].
- Defense Sector Tailwinds: Showing independent strength backed by export milestones, including the sealing of the BrahMos missile deal with Vietnam and final-stage negotiations with Thailand [00:22:55], aligned with growth opportunities highlighted by Defense Minister Rajnath Singh [00:23:12].

GDP Growth Moderation: A Reuters poll of 45 economists (conducted May 22 – June 1) estimates that India’s economic growth slowed to a median forecast of 7.2% year-on-year for the Jan–Mar 2026 quarter (down from 7.8% in the prior quarter), weighed down by softer external demand and cooling industrial activity [00:04:01]. Individual estimates ranged from a low of 6.1% to a high of 7.7% [00:04:31].
Industrial Production (IIP): Official figures from MOSPI revealed that industrial production grew 4.9% year-on-year in April under a newly revised IIP series utilizing 2022-23 as the base year [00:04:39]. Growth was primarily anchored by manufacturing, which saw a 6.2% expansion [00:04:53].
GST Collections: Gross GST collections for May stood at over ₹1.94 trillion (194,000 crores), representing a 3.2% year-on-year rise [00:10:28]. While down from April’s all-time record high of ₹2.43 trillion [00:10:38], the core data showed underlying structural resilience: taxable supplies of goods grew by 27%, services grew by 22%, and import-linked IGST collections rose 19% [00:10:47].
CRISIL Monetary Policy Assessment: DK Joshi (Chief Economist, CRISIL) analyzed the shifting risk matrix ahead of Friday's RBI monetary policy review [00:05:05]. Since the April meeting, downside risks to growth have intensified, while upside risks to inflation have fully materialized [00:05:16]:
- Monsoon Fractures: The IMD and Skymet have downgraded rainfall projections to 90% below the Long Period Average (LPA), signaling El Niño risks [00:05:50, 00:20:17]. Though an Indian Ocean Dipole (IOD) could trigger late-stage rains, the initial outlook remains severely challenged [00:05:56].
- Retail Fuel Pass-Through: The government has begun passing global crude oil hikes directly onto consumers at the retail level, which will immediately pressure headline CPI [00:06:14].
RBI Stance & Bond Yield Dynamics: Despite these pressures, Joshi predicts the RBI will maintain a "wait-and-watch" approach, holding interest rates and the policy stance steady while delivering highly cautious forward guidance [00:07:20]. Headline and core CPI remain temporarily benign due to high base effects from the prior year's low 2.1% baseline [00:06:54, 00:07:56]. Addressing demands for defensive rate hikes to protect the rupee, Joshi stated that the interest rate differential has already narrowed because the U.S. Fed exited its zero-interest rate regime [00:08:52]. Indian sovereign bond yields have already fully priced in high oil and fiscal stress, and are currently higher than they were before the RBI started cutting rates last year [00:08:33]. The central bank is now more tolerant of natural rupee depreciation, intervening only during instances of acute market stress, rendering interest-rate defense unnecessary [00:09:10].

Auto Sales Fuel Divergence: Major automakers reported higher sales volumes for May, driven entirely by alternative fuel shifts amid four consecutive retail fuel price hikes [00:09:39, 00:10:06]. Maruti Suzuki reported a massive 40% surge in compressed natural gas (CNG) vehicle bookings [00:09:47], while Tata Motors clocked an impressive 42% overall sales surge backed by substantial EV bookings [00:09:53, 00:10:20]. Other updates included Mahindra & Mahindra reporting an 11% increase and Hyundai booking a 9.1% growth [00:10:20].
The Strategic Importance of the India-Oman CEPA: The Comprehensive Economic Partnership Agreement (CEPA)—originally inked on December 18 last year—officially entered into force yesterday [00:12:50]. To mark its operational launch, 10 initial consignments of gems, jewelry, and agricultural products were shipped under preferential tariffs from Mumbai, Kolkata, and Chennai [00:13:04]. Oman is India’s second-largest trading partner in the Gulf, with bilateral trade climbing from $10.6 billion to $11 billion last year [00:13:24].
Bypassing Hormuz: A crucial report from Ajay Srivastava of the Global Trade Research Institute (GTRI) highlights that Oman’s massive geographical advantage lies in its coastline sitting entirely outside the vulnerable Strait of Hormuz, directly on the Arabian Sea and the Gulf of Oman [00:13:39]. Major deepwater ports like Salalah and Duqm remain accessible even if traffic through Hormuz is completely severed by geopolitical conflict [00:13:50]. The CEPA is less about typical bilateral trade and more about establishing a permanent, un-shockable energy and industrial input gateway for India [00:14:02].
US Trade Agreement Complications: India’s proposed trade pact negotiations with the US face fresh legal complexities [00:14:17]. Although both nations established a baseline framework back in February [00:14:30], the US Supreme Court recently struck down a series of major legacy tariffs imposed under the International Emergency Economic Powers Act, ruling that such tax-imposing powers rest solely with Congress, not the President [00:14:43]. This ruling nullifies several foundational objectives of the current round of talks, requiring structural legal revisions [00:14:56].

Oil Shock Vs AI Boom: What Happens To Indian Stocks Next? | 2 Jun 2026 | Govindraj Ethiraj | The Core Report

References

Investing in a Divergent Economy | 1 Jun 2026 | Notes on the Week Ahead | David Kelly | J.P.Morgan

Falling Yields Reinforce Equity Market Resilience | June 1, 2026 | Professor Siegel Weekly Commentary | WisdomTree

RBI Needn’t Hike Rates; Must Nudge Capital Flows By Bearing Hedging Cos Of ECBs: Chetan Ahya | 2 Jun 2026 | CNBC-TV18

Oil Shock Vs AI Boom: What Happens To Indian Stocks Next? | 2 Jun 2026 | Govindraj Ethiraj | The Core Report

References

Investing in a Divergent Economy | 1 Jun 2026 | Notes on the Week Ahead | David Kelly | J.P.Morgan

Falling Yields Reinforce Equity Market Resilience | June 1, 2026 | Professor Siegel Weekly Commentary | WisdomTree

RBI Needn’t Hike Rates; Must Nudge Capital Flows By Bearing Hedging Cos Of ECBs: Chetan Ahya | 2 Jun 2026 | CNBC-TV18

1. Global Market Disconnect & Energy Shock [00:00:50]

2. Indian Equities & Corporate Earnings Impact [00:01:49]

3. Institutional Liquidity & Sector Performance Analysis [00:15:14]

4. Macro Indicators & RBI Monetary Policy Outlook [00:04:01]

5. Commercial Trade & Infrastructure Gateways [00:09:39]

6. Media & Sports Broadcasting Rights [00:23:28]

Finding Balance: Growth, Income and Liquidity | 1 Jun 2026 | Morgan Stanley

References

Related nuggets

Investing in a Divergent Economy | 1 Jun 2026 | Notes on the Week Ahead | David Kelly | J.P.Morgan

Falling Yields Reinforce Equity Market Resilience | June 1, 2026 | Professor Siegel Weekly Commentary | WisdomTree

RBI Needn’t Hike Rates; Must Nudge Capital Flows By Bearing Hedging Cos Of ECBs: Chetan Ahya | 2 Jun 2026 | CNBC-TV18

References

Related nuggets

Investing in a Divergent Economy | 1 Jun 2026 | Notes on the Week Ahead | David Kelly | J.P.Morgan

Falling Yields Reinforce Equity Market Resilience | June 1, 2026 | Professor Siegel Weekly Commentary | WisdomTree

RBI Needn’t Hike Rates; Must Nudge Capital Flows By Bearing Hedging Cos Of ECBs: Chetan Ahya | 2 Jun 2026 | CNBC-TV18

1. Global Market Disconnect & Energy Shock [00:00:50]

2. Indian Equities & Corporate Earnings Impact [00:01:49]

3. Institutional Liquidity & Sector Performance Analysis [00:15:14]

4. Macro Indicators & RBI Monetary Policy Outlook [00:04:01]

5. Commercial Trade & Infrastructure Gateways [00:09:39]

6. Media & Sports Broadcasting Rights [00:23:28]

Finding Balance: Growth, Income and Liquidity | 1 Jun 2026 | Morgan Stanley