Good morning! You’ve heard of the military-industrial complex. Now behold the heat-industrial complex. Bloomberg reports that Indian traders have been betting on consumer durables, energy, and beverage and ice-cream companies since the recent stock market crash. After the India Meteorological Department (IMD) issued heatwave warnings up until June, shares of air cooling companies, Reliance Power, Adani Power, and PepsiCo bottler Varun Beverages rose between 6%-15%. Analysts are also rubbing their hands in glee over market prospects during the general elections, when heat-stricken voters will spend their dime on the nearest refrigerated thing. Who’s gonna tell these folks that money can only go so far before the earth literally burns everything to the ground?😒

Isn't it just easier to travel with a Schengen Visa? It’s just smoother mobility across borders. Thailand is batting for a regional visa programme with neighbours Cambodia, Laos, Malaysia, Myanmar and Vietnam. 

Also in today’s episode: Tesla CEO Elon Musk has posted on X, formerly Twitter, that self-driving robotaxis will be unveiled on 8th August this year. But there’s room for scepticism. Tune in on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

The Market Signal*

Stocks & Economy: After shooting past $90 per barrel, oil prices cooled somewhat but production cuts by Mexico, shackled Russian exports and Opec supply cuts may have enough thrust to push the price beyond $100 a barrel. That is not good news for India, which was taking comfort in managing to bring down retail inflation to within the Reserve Bank of India’s target range. 

US treasury secretary Janet Yellen’s visit to China appears to have been productive as despite sharp rhetoric before and during her visit about Chinese overcapacity overwhelming global trade, the atmosphere remained warm and cordial, media reports suggested. The two sides also reiterated that their fraught relationship was stabilising. 

Asian markets were mixed with Japanese shares moving up and Chinese stocks sliding down. The GIFT Nifty hinted at a positive opening for Indian equities. Earnings will determine market direction in the coming days.

PHARMACEUTICALS

Wonders Never Cease

The weight-loss medication everyone’s talking about is morphing into a wonder drug that may treat everything from kidney disease to neurological conditions. Novo Nordisk’s (NN’s) latest trial reveals that its blockbuster, WeGovy, eased heart failure symptoms in diabetes patients.

US health insurers only recently agreed to cover WeGovy for Medicare patients with cardiovascular issues. Without coverage, the drug costs $1,350 a month. NN is trying to build its case for cost-conscious insurers. It’s also up against competitors developing potentially-better alternatives. Additionally, a Chinese drugmaker has already created a biosimilar.

The race to develop “mother brands” is tightly-contested in India too. Take Torrent’s acquisition of Elder Pharmaceuticals: the former leveraged Elder’s popular Shelcal to capitalise on a booming painkiller market. To get a sense of how lucrative this market is, head to The Core for today’s story on one of the most controversial analgesics in India: nimesulide.

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

Today, he speaks to DK Joshi, chief economist, Crisil, on India's fight against incessant food inflation. Also in today’s episode: Vivek Rathi, director, research, Knight Frank, on whether property prices and sales will continue to remain strong in FY25.

LEADERSHIP

Pardon Our French

Thierry Delaporte has left the Wipro building. Srinivas Pallia, a veteran insider since 1992, is the company’s new CEO and MD.

Delaporte’s appointment in 2020 triggered a stock rally, but the optimism didn’t last. Under his leadership, Wipro underwent significant operational changes. In 2023 alone, over 10 senior executives, including former CFO Jatin Dalal, left the IT major.

Wipro under Delaporte—once the highest-paid CEO of any Indian company—didn’t finalise any mega deals in the past three years, while its market cap and revenue continued to decline. Worse, Dalal joined rival Cognizant, which bagged one of Wipro’s biggest clients in January 2024: Japan’s Takeda Pharmaceutical. Another competitor, TCS, got its biggest deal ever in the same month.

Pallia is tasked with retaining talent, winning large deals, and boosting employee morale, which is reportedly at an all-time low because Paris-based Delaporte didn’t spend enough time with teams in India and the US.

ELECTRIC VEHICLES

No Cheap Thrills Here

It’s been less than three months since we told you about Tesla’s sticky switchuation. After BYD overtook it as the world’s top-selling EV maker, the American company informed suppliers it would start production of the entry-level Model 2, codenamed ‘Redwood’, to compete with the deluge of affordable Chinese EVs. Meanwhile, BYD is targeting the luxury and premium markets.

According to Reuters, Tesla has now scrapped plans for the $25,000 model. Company chief Elon Musk rubbished the report.

The report cites company insiders, who say Musk has directed staffers to (re)focus on driverless robotaxis. But autonomous cars are subjects in several lawsuits in the US and a technological challenge too, which is why Apple ditched its car project. Tesla’s Full Self-Driving and Autopilot systems aren’t just being investigated for several crashes; they’re also marketed as something they’re not.

The Signal

Musk’s target of selling 20 million vehicles by 2030 looks unachievable with a limited lineup. Tesla recently reported its first ever fall in deliveries since 2020, and its stock has fallen 34% this year.

That said, cheap EVs aren’t a panacea for the global EV slowdown. General Motors killed its mass market Chevrolet Bolt in 2023, and in an environment where buyers are either opting for hybrids or premium EVs, even India has turned into a battle zone between Tata and Hyundai, as The Core reported.

The question now is which models Tesla will manufacture in an upcoming $2-3 billion plant in India, where it was prioritising the Model 2.

FYI

Summer blues: Vistara plans to cancel up to 30 flights a day or 10% of its current capacity for April as it struggles to stabilise operations due to crew shortages. The airline may review its rostering system following discussions with pilots.

On second thought: PTI reports that the Insurance Regulatory and Development Authority of India has expressed concerns over the acquisition of Reliance Capital by Hinduja Group’s IndusInd International Holdings. The Rs 9,650 crore acquisition plan is “not in line with insurance regulations”.

Fair warning: The IMD has issued an orange alert for inclement thunderstorms and hailstorms in Vidarbha.

Booster: China’s central bank is setting up a relending programme worth about $69 billion for the country’s science and technology sectors.

Shots fired: Political strategist Prashant Kishor has advised Rahul Gandhi to “step aside” if the Congress party does not get the desired results in the general elections.

THE DAILY DIGIT

Rs 2.3 lakh crore

The amount the Adani Group is investing in India’s renewable energy sector through to 2030. (The Hindu Business Line)

FWIW

Srettha Thavisin closes the Thai gap: More like he wants to. The prime minister of Thailand is pushing for a Schengen-like joint visa for southeast Asia. He’s brought up the proposal for seamless mobility with Vietnam, Cambodia, Laos, Malaysia, and Myanmar. Southeast Asia had 70 million tourist arrivals in 2023. Thailand, long synonymous with (and fed up of) overstaying backpackers, wants to attract long-haul travellers who are also big spenders. To that end, it’s keen on events-based tourism and casinos in entertainment complexes. Will its neighbours bite? We hope so.🌴