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India, New Zealand to speed implementation of FTA; to double trade to ₹35,000 cr by 2030
Dalip Singh
New Delhi
India and New Zealand have committed to ensuring the early entry into force and effective implementation of the Free Trade Agreement (FTA), as outlined in a vision document unveiled in Auckland on Saturday. The two countries also elevated their ties to a strategic partnership, setting a 2030 roadmap to double bilateral trade in goods and services to ₹35,000 crore (NZ$7 billion) over the next four years.
The strategic partnership envisages deeper cooperation in trade, defence, maritime security, tourism, and culture. Prime Minister Narendra Modi and his New Zealand counterpart Christopher Luxon announced the roadmap after bilateral talks in Auckland. The FTA was originally signed on April 27, 2026.
RATIFICATION ON
The announcement is expected to ease concerns over opposition to the pact. While parliamentary readings have been completed, a specific timeline for the agreement to come into force has not yet been set.
External Affairs Secretary (East) Rudrendra Tandon stated that New Zealand has assured India that the agreement enjoys bipartisan political backing and that the ratification process would move ahead swiftly. He noted that despite differences within the ruling coalition, Prime Minister Luxon conveyed that the FTA enjoys broad political support.
Regarding the implementation timeline, Tandon added: “There is no commitment to a set date, but the ratification process has begun... There is hope”. During the visit, leaders also met with CEOs and business heads, urging them to expand investments to help achieve the 2030 trade target.
INVESTMENT PUSH
Describing the FTA as a landmark agreement, Modi said it would deepen economic ties and create new opportunities in market access, investment, services, technology, and talent mobility.
On New Zealand’s announcement to facilitate up to $20 billion in investments, Tandon clarified that the focus is on building a long-term economic partnership rather than creating binding investment commitments.
SME IPO mirage: Debut dazzle, long-term damage
BITTER AFTERTASTE. Over 500 SME IPOs from the past decade are under water; 46 per cent of 100x-subscribed issues are trading below offer price
Dhuraivel Gunasekaran
bl. research bureau
India’s SME IPO market, with far lighter listing requirements than the mainboard, has rarely lacked takers. How else can one explain frenzied bidding for a two-showroom motorcycle dealer, a regional chakki atta maker or a farming business deriving most of its revenues from pomegranates? Even repeated instances of fund diversion, mismatched accounts and untraceable entities have barely dented investor appetite.
THE LURE OF GAINS
The lure is simple: spectacular listing gains. That appetite has endured despite a challenging market. Amid geopolitical uncertainty and weak sentiment, just 27 mainboard IPOs have hit the market this year. SME platforms, however, have seen more than three times that number. No mainboard IPO has delivered a 50 per cent listing gain in the past six months.
By contrast, eight SME IPOs have achieved the feat, including three that nearly doubled on debut in the past month alone—making even Phir Hera Pheri’s famous “25 din mein paisa double” promise look conservative.
Yet, beneath the listing-day fireworks lies a sobering reality: Nearly half the SME companies listed over the past decade now trade below their issue price. A bl.portfolio analysis of Capitaline data show that 518 of the 1,052 companies listed on the BSE and NSE SME platforms since January 2016—or 49 per cent—are currently below their offer price. For investors who bought at the offer price and held on, those are uncomfortably close to coin-toss odds. Contrast this with the mainboard where a lower 36 per cent are in the red.
WINNERS & LAGGARDS
The return profile of SME IPOs is highly polarised. While some companies have created spectacular wealth, many more have delivered disappointing returns.
Of the 1,052 SME companies listed since January 2016, 377 (36 per cent) have fallen more than 25 per cent from their issue price, including 80 that have lost over three-fourths of their value. At the other end of the spectrum, 259 companies (25 per cent) have more than doubled from their IPO price, including 131 that have generated returns of over 250 per cent. However, only 63 companies—just 6 per cent of the total universe—have delivered multibagger returns exceeding 500 per cent.
Heavy oversubscription, meanwhile, proved no substitute for due diligence. Of the 294 SME IPOs subscribed more than 100 times, 134 (46 per cent) now trade below their issue price. As many as 102 (35 per cent) have fallen more than 25 per cent. Yet, returns remain sharply polarised: 28 per cent have more than doubled, 21 have delivered returns above 500 per cent, and 10 have crossed the 1,000 per cent mark.
Resourceful Automobile exemplifies the phenomenon. Its ₹12-crore IPO was subscribed 396 times, despite the company operating just two Yamaha dealerships with a workforce of eight. It listed flat and now trades 51 per cent below its issue price.
MOVERS AND SHAKERS
The sectoral break-up paints a similar picture. Among sectors with meaningful representation, ‘Trading’ has been one of the weakest performers, with 42 of 74 stocks (57 per cent) ruling below their issue price and 25 companies losing more than half their value. ‘IT-Software’ presents a mixed bag. While 42 of the 76 companies trade below their issue price, the sector has also produced 17 stocks that have more than doubled. ‘Textiles’, with 51 listings, also disappointed investors, with 61 per cent of the companies in the red.
On the wealth creation side, the ‘Capital Goods’ sector led with 25 stocks with attractive returns from a universe 54 companies, followed by ‘IT-Software’ (17 of 76), ‘Trading’ (15 of 74), ‘Infrastructure Developers’ (11 of 55) and ‘FMCG’ (11 of 49).
WHY GAINS FADED
For years, the SME IPO market was seen as a hunting ground for quick listing gains rather than long-term investing. Strong oversubscription, limited free float, aggressive marketing and rising retail participation often produced sharp debut-day pops. But many of those gains proved short-lived.
Several SME companies have limited operating history and a small revenue base, leaving earnings vulnerable to execution setbacks and economic cycles. As liquidity normalises and early investors book profits, inflated valuations correct. The recent market downturn has merely forced prices to reckon with what the IPO frenzy had overlooked—earnings.
Welcome to the world of AI-nomics
ARTIFICIAL IS REAL. Are you familiar with tokenomics, agentic AI and open-source? Read on to know what these terms mean and how they matter economically to investors
Nishanth Gopalakrishnan
bl. research bureau
Artificial intelligence (AI) has arrived and how! It has taken centre stage as the next-gen general purpose technology and is rapidly changing the world as we know it. It is now a force upending markets, business models, capital allocation decisions and even the way we need to plan for our future energy needs. Companies are racing to fold AI into their operations, and some are even learning that adoption without discipline comes with costs.
As this shift plays out, the vocabulary of AI is no longer confined to tech blogs and research papers. It is getting mainstream and quietly infiltrating boardrooms, earnings calls and other market literature. Terms like ‘tokenomics’, ‘agentic AI’ and ‘open-source’ are increasingly becoming how companies describe their spending and strategy.
TOKENS
As humans, the smallest unit of information we use to represent language is a single character. But the smallest unit of language that a large language model (LLM) uses is called a token. A token can be a set of characters, a part of a word, a syllable, a whole word or even a short multi-word phrase. The code that converts language to tokens is called a tokeniser.
A good rule of thumb is that an English word is represented by approximately 1.5 tokens. If you input a prompt that is 100 words long, the LLM will likely work with 150 tokens. After the input is tokenised, the model converts the tokens into vectors, which are long lists of numbers that form the basic computational unit for the model to generate output.
TOKENOMICS
Model providers such as OpenAI and Anthropic bill customers by tokens, which directly relate to the amount of processing their GPUs perform for a given prompt. Just as electricity bills are based on units consumed, LLM billing is based on tokens consumed. A larger, more robust model will cost more per token. Typically, users are billed per million tokens, and input tokens generally cost less than output tokens because generating text requires more processing than reading it.
Recently, some companies experienced ‘tokenmaxxing’, where employees were incentivized to use larger models unnecessarily to boost consumption as a proxy for productivity. One customer of Anthropic reportedly burned $500 million worth of tokens due to failing to set spending caps, while Uber reportedly spent its entire 2026 AI budget in just four months. This led Uber to set a cap of $1,500 per employee per month for AI tools. Despite these costs, the price per token has dropped by over 90 per cent over the last three years.
AGENTIC AI
Agentic AI refers to the ability of an AI model to spawn and deploy agents meant to carry out complex tasks. Agents are autonomous systems that can operate independently, use various tools, and plan and execute tasks step-by-step using an LLM's reasoning abilities.
For example, a user could prompt an agent to "Create a to-do list app." The model would then autonomously define features, write, test, debug, and deploy the code, turning to the user only if it needs additional inputs. Agents can also call external tools via APIs (application programming interfaces). If asked to find a flight, an agent can check a user's Google Calendar for free time and then connect to a travel booking site to collect prices—all without human intervention. However, because agents plan and iterate internally, they can be "token guzzlers" if not managed efficiently.
PROPRIETARY VS OPEN-SOURCE MODELS
A proprietary LLM is developed and owned by an organization (e.g., OpenAI’s GPT series, Anthropic’s Claude, or Google’s Gemini). Their training code, data, and parameters are private.
An open-source model (e.g., Meta’s Llama 4, DeepSeek-R1, or Mistral 3) is available for commercial use without a license from the developer. In the AI world, these are often open-weight models, meaning the model weights are public, but the training data and code remain private. Weights (or parameters) determine which input information a model pays attention to. In an open-weight model, users can ‘fine-tune’ weights for specific tasks or create a distilled model—a smaller, more compute-efficient version specialized for applications like drug discovery or flight scheduling.
SCALING LAWS
Research shows a predicted rise in model performance as three factors are scaled: model size (parameters), training data, and compute power. Balance is essential; the "Chinchilla paper" found that for compute-optimal training, model size and training data should be scaled equally.
While bottlenecks like compute were overcome by switching from CPUs to GPUs and adopting the transformer architecture, training data may be the next hurdle. Digital data availability is finite, and incremental data may soon be contaminated by AI-generated content, potentially limiting future performance gains.
ARTIFICIAL GENERAL INTELLIGENCE
AGI, or "strong AI," refers to an AI system that matches or surpasses human cognitive abilities, autonomously learning and transferring knowledge across unfamiliar tasks. Current LLMs are still considered Artificial Narrow Intelligence (ANI) or "weak AI," as they are designed to excel at predefined tasks. While versatile, critics argue LLMs are still far from achieving human-level spatial reasoning, social-emotional awareness, or fine motor coordination.
FDA inspections
SIMPLY PUT.
Sai Prabhakar Yadavalli
bl. research bureau
Leo and Emraan meet in the office cafeteria over a cup of coffee, and the discussion moves from football to US FDA at a surprising pace.
Leo: Hey, did you see the match yesterday? Argentina won like I said.
Emraan: The player made a foul and should have been carded, and you know it. Speaking of Red Cards, your team won, but one of your investments recently got a red card. I read in the news that a pharma company got a FDA observation. Can you explain the FDA thing in detail please? Keeps happening often.
Leo: Sure, anything to forget the pain of loss. US FDA is the regulatory body that regulates pharmaceutical products sold in the US. To ensure safety of the products and compliance with good manufacturing practices, which are quite stringent, FDA regularly inspects plants from where products (even generics) meant for the US are manufactured. At the end of the inspection, a Form 483 is issued, which only contains the list of deficiencies in the manufacturing process. But based on this, the plant is judged.
If FDA determines NAI (no action indicated), the plant has done well and operations continue. Slightly milder is VAI (voluntary action indicated), where a voluntary action is expected of the plant/company to improve. If an OAI (official action indicated) is passed, then the company will have to make corrections along prescribed lines. But at the extreme end, a warning letter will be issued, which essentially closes a plant to US exports until the time corrections are made. This is, in short, the FDA inspection process.
Emraan: How much impact will the latter two have – OAI and warning letter?
Leo: The first two have no impact. OAI, on the other hand, mostly allows the plant to continue its current operations. But new product approvals will be withheld. This is the crucial pain point. US generics face consistent price erosion of 6-8 per cent per year under normal circumstances. The only way to counter this impact is a consistent flow of new products. If this is delayed, the impact of price erosion and lost sales of new products will impact the US operations. If the new product was time-sensitive, including the first-day launch or first-wave launches, then the product launch itself loses relevance for investors/company.
A warning letter will close the plant to US sales, new and existing, until the time the issues are addressed. Most likely, the correction process will include a re-inspection by the US FDA as well. It is not unusual for the process to last more than two years for a plant, which shows up on the company’s RoE metrics as well.
Then there is the second-order impact of any adverse observation. Cost of consultants hired to make the corrections is significant. Companies also look to shift the filing of new products from that plant to either a new one or a third party, which involves time and cost of filing/shifting. The US FDA is also used as a barometer for many other countries’ regulatory bodies which might have a cascading effect on the plant.
Emraan: What triggers an inspection in the first place?
Leo: Firstly, these are not pre-announced and can be spontaneous. But the US FDA periodically inspects facilities and a rule of thumb can be around two years. But a few years ago, the detection of nitrosamine impurities in a few medicines sparked a slew of inspections, leading to several other simultaneous inspections across companies in India, which resulted in observations and issuing of warning letters.
Then there were product-specific inspections also. If a company has filed an Abbreviated New Drug Application (ANDA) to manufacture a complex product like respiratory drug-device combination, biosimilar, insulins, or peptides, even if they are generic, one can most certainly expect a product-specific inspection as well.
Emraan: Wow! That is a high degree of regulation. But considering pharma, it is expected.
Leo: Yes, just like how Argentina was expected to win.
Holding steady
INDEX OUTLOOK. Broader outlook remains positive in spite of the failed head and shoulder pattern
Gurumurthy K
bl. research bureau
IMMEDIATE RESISTANCE
- Nifty 50: 24,350
- Sensex: 78,800
- Nifty Bank: 58,900
Last week, we had said that the Nifty 50 and Sensex are looking bullish with an inverted head and shoulder pattern formation. This pattern has failed. The sharp fall on Wednesday, after the US announced that the ceasefire was over, played the spoil sport.
Although the pattern has failed, the broader picture remains positive. The recovery towards the end of the week indicates the presence of buyers in the market at lower levels. The Sensex and Nifty which were down about 2 per cent mid-week have recovered and closed the week marginally lower by 0.25 per cent each. As such, the development on the US-Iran war front has not changed anything on our overall bullish outlook.
FPIs BUY
The foreign portfolio investors (FPIs) continue to buy Indian equities. The equity segment saw a net inflow of about $1.59 billion so far in July. There has been an inflow of about $3 billion in the last four weeks. Are the FPIs coming back? We need to wait and watch. If the FPIs increase their pace of purchase, then the Sensex and Nifty can scale new highs in the coming months.
NIFTY 50 (24,206.90)
Short-term view: The support at 23,800 continues to hold well. That keeps the bias positive. Immediate resistance is at 24,350. A break above it can strengthen the momentum. Such a break can take the Nifty up to 24,800 in the short term.
Failure to breach 24,350 can drag the Nifty down to 24,000-23,900. In that case, Nifty can remain in a range of 23,800-24,350 for some time. The short-term picture will turn negative only if the index declines below 23,800. If that happens, a fall to 23,500 and even lower can be seen.
Medium-term view: The broader 22,000-26,500 range is intact. Within that, Nifty is moving up and is expected to rise towards 26,500, the upper end of the range. A break above 24,800 will clear the way for this rise.
The long-term picture remains positive to get a bullish breakout above 26,500 eventually. Such a break can take the Nifty higher to 28,000 and even 30,000 in the long term. A fall below 22,000 is needed to negate this bullish view.
NIFTY BANK (58,045.90)
Short-term view: Except for the high volatility, the Nifty Bank index oscillated well within its 56,500-58,900 range. The near-term picture continues to remain unclear. We have to wait for a breakout on either side of 56,500-58,900 to get clarity on the next move.
The bias is positive. So, we see higher chances for the index to breach 58,900 and rise to 60,500-61,500 in the short term. The outlook will turn negative only if the index declines below 56,500. In that case, 56,000 or even 55,000 can be seen on the downside. Our preference is to see a bullish breakout above 58,900.
Medium-term view: The overall bullish picture is intact. Key resistance to watch will be 61,500. A break above it will clear the way for a rise to 65,000 in the medium term. From a long-term perspective, there is potential for the Nifty Bank index to target 68,000-69,000.
Crucial supports are at 53,500 and 50,000. The above-mentioned bullish view will turn wrong only if the Nifty Bank index declines below 50,000. But that looks unlikely now.
SENSEX (77,569.39)
Short-term view: The 76,300-76,000 support zone mentioned last week has held very well. Sensex touched a low of 76,259 and has recovered from there. Immediate support is at 77,100. A rise to 78,250 or even 78,800 looks likely this week. A decisive break above 78,800 will boost the momentum and can take the index up to 81,000-81,500 in the short term.
Key support to watch will be 76,000. The short-term outlook will turn negative if the Sensex declines below this support. In that case, a fall to 74,000-73,000 is possible.
Medium-term view: For now, the 71,000-86,000 range is intact and the Sensex can go up within it. A rise above 81,500 will increase the chances of seeing 86,000, the upper end of the range, in the medium term. We expect the Sensex to breach 86,000 eventually and rally to 90,000 and even 94,000 over the long term. This bullish view will go wrong only if the Sensex declines below 71,000.
NIFTY MIDCAP 150 (23,166.50)
The index broke the support at 22,600 but did not sustain. It has risen back from the low of 22,431.35 recovering all the loss. The index is now coming close to the crucial resistance level of 23,300. We expect it to breach this hurdle and rise to 26,000-26,500 in the medium term. Such rise will strengthen the momentum and keep the doors open for a rally to 28,000-28,500 in the long term.
Failure to breach 23,300 can drag the index down to 22,800-22,700. The index has to get a sustained fall below 22,500 to turn the short-term picture negative. Only then a fall to 22,000 and lower levels will come into the picture. We reiterate that 21,000-20,800 is a crucial support which has to be broken to turn the long-term outlook bearish.
NIFTY SMALLCAP 250 (18,118.90)
The support 17,500 continued to limit the downside for the third consecutive week. The strong bounce from the low of 17,526 keeps the chances high to breach the resistance at 18,300 this week. Such a break will boost the momentum. It will also clear the way for the Nifty Smallcap 250 index to rally to 22,500-23,000 in the medium term and 24,000-25,000 in the long term.
The index will come under pressure for a fall to 17,000-16,500 only if it breaks below 17,500. For this to happen, the index has to get a strong selling from around 18,300.
More upside left
US MARKET OUTLOOK. The benchmark indices have more room to rise
Gurumurthy K
bl. research bureau
The Dow Jones Industrial Average is struggling to rise while the S&P 500 and the NASDAQ Composite indices are slowly gaining strength. The Dow Jones was down 0.5 per cent for the week. The S&P 500 and the NASDAQ Composite indices were up 1.2 and 1.7 per cent respectively last week.
Last week, we had cautioned about getting a trend reversal. It looks like this reversal can now happen with a slight delay. The S&P 500 and the NASDAQ Composite indices have room to rise more before hitting a peak. To that extent, the Dow Jones can also manage to hold higher.
Here is an analysis on where the US markets are headed going forward:
DOW JONES (52,642.27)
The index broke the crucial resistance level of 53,150 last week but did not sustain. At the same time, the support at 52,000 is also holding well for now.
We can expect the Dow Jones to remain in a range of 52,000-53,300 for some time. If it manages to breach 53,300, an extended rise to 54,000 can be seen. As mentioned last week, a fall below 52,000 will indicate that a top is in place. It will then turn the outlook bearish for a fall to 50,000-49,000 thereafter.
S&P 500 (7,575.38)
The way the S&P 500 index is holding above 7,400 and the rise last week indicates that the bullish picture is still intact. That keeps alive the chances of a rise to 7,800-7,900. A decisive break above 7,600 can trigger this rise. The index will come under pressure for a fall to 7,200-7,100 only if it declines below 7,400.
NASDAQ COMPOSITE (26,281.61)
The support 25,600 has held very well. The NASDAQ Composite index has bounced back well from its low of 25,526. The rise above 26,000 has eased the downside pressure. A strong follow-through rise from here can take the NASDAQ Composite index up to 27,500-28,000 in the coming weeks.
The price action thereafter will need a close watch. A rise beyond 28,000 might not be very easy. As such, we need to be very cautious as the index approaches 28,000.
DOLLAR OUTLOOK
The dollar index (100.97) oscillated around 101 all through the week. The support at 100.60 mentioned last week is holding very well. As long as the index stays above 100.60, there is no change in our bullish bias.
We expect the dollar index to get a sustained break above 101. Such a break can take it higher towards 103 in the coming weeks. It will also keep the upside open to see 105-106 over the medium term. The short-term outlook will turn negative only if the index breaks below 100.60. If that happens, a fall to 99.30 can be seen.
TREASURY YIELD
The US 10Yr Treasury Yield (4.56 per cent) seems to be struggling to get a strong follow-through rise above 4.55 per cent. The bias is positive. A rise above 4.6 per cent can boost the momentum. Such a break can take the 10Yr Treasury Yield up to 4.8 per cent.
Does asset allocation really work?
REAL RETURNS. Yes, it does, proves a live testing of a 60-30-10 portfolio over the last 11 years
Aarati Krishnan
Since the Iran conflict broke out, established conventions in investing have flown out of the window. Asset allocation has been one casualty.
Divide your portfolio between different uncorrelated assets, experts always said, and you will enjoy a smoother journey with better returns. But Indian investors who maintained asset-allocated portfolios have suffered higher value erosion than folks who didn’t, since early this year.
From February 28 (when the Iran war broke out) till date, stock markets have declined about 5 per cent (at the Nifty50 level) on fears that rising energy prices will dent company earnings. Bonds usually move in the opposite direction to stocks. But on this occasion, bond prices too fell, on fears that rising commodity prices will revive inflation and interest rate hikes.
Gold, which usually rockets during crises, let down investors too. Since February-end, gold has fallen 11 per cent in rupee terms. The prospect of rate hikes in the US has made global investors prefer US treasuries over gold, as a safe-haven choice.
If all asset classes are going to tumble in tandem when a crisis breaks out, what’s the point in my maintaining an asset-allocated portfolio? You may also be wondering if asset allocation works in the real world.
This is why we ran the numbers on how an asset-allocated portfolio would have fared in the last 11 years, using actual returns on different assets. We found that an asset-allocated portfolio with 60 per cent equity, 30 per cent debt and 10 per cent gold, delivered almost the same returns as an equity-only portfolio, with a much smoother journey.
METHODOLOGY
We assumed that an investor started out with ₹1 lakh to invest in end-2014. He invested ₹60,000 in a Nifty50 index fund, ₹30,000 in a short-term debt fund (category average as proxy) and ₹10,000 in a gold exchange-traded fund (category average).
We then traced the growth of this portfolio based on actual returns delivered by each of these assets in every calendar year. At the end of each calendar year, we took stock of the portfolio’s asset allocation after accounting for gains.
If any asset overshot its preferred allocation by 5 percentage points or more, we booked profits on it and moved the excess to the other two assets. The asset with the higher shortfall compared to the preferred allocation was refilled first.
This exercise did not lead to much portfolio churn. In the 11-year period, there were only two years where the portfolio needed rebalancing.
- By the end of 2021, the equity portion climbed to 65.6 per cent and had to be rebalanced back to 60 per cent. The profits booked on equity were reinvested in debt, which had fallen to a 25 per cent allocation.
- In 2025, the gold allocation shot up to 15 per cent of the portfolio, requiring profit-booking on gold and reinvesting that sum back into debt and equity.
TAKEAWAYS
We compared how the asset-allocated portfolio fared over the 11 years, against a full-equity portfolio invested only in the Nifty50. These were the findings:
- Both portfolios delivered positive returns in nine of the 11 years.
- Both had two negative years — 2015 and 2026. However, the asset-allocated portfolio suffered much lower losses than the equity-only portfolio. This is good because behaviourally, an investor suffering a 3 per cent loss will face less stress and temptation to pull out than one faced with an 8 per cent loss of net worth.
- The best years for the equity-only portfolio saw big gains of 28.6 per cent and 24.1 per cent (2017 and 2021). The best years for the asset-allocated portfolio saw more moderate returns of 18.4 per cent and 18.1 per cent (2017 and 2024).
- The performance demonstrates the benefit of diversifying across assets. In 2016, when equities delivered a mere 3 per cent, debt and gold lifted up portfolio returns with 9.8 and 11.8 per cent gains respectively. In 2017, when debt and gold delivered poor returns, equity saved the day with 28.6 per cent.
- In several years where equity delivered single-digit gains or losses (2016, 2022, 2026), gold managed gains and debt anchored the portfolio with stable returns.
- Maintaining a fixed asset allocation forces rule-based profit-booking on outperforming assets. In our study, an investor would have been forced to book profits on equity at the end of 2021 and gold at the end of 2025 (after a bumper 75.8 per cent gain). It is doubtful if any investors, left to themselves, would have booked profits at those times, when maximum greed was at play.
Overall, the 60-30-10 portfolio delivered an almost identical return to the full-equity portfolio over this 11-year period, at a respectable 10 per cent. The asset-allocated portfolio, however, subjected investors to a less bumpy journey and managed to deliver a better overall return than the equity-only portfolio in six out of the 11 years. That’s surely a solid testimony for asset allocation.
IEA sees India’s natural gas demand dropping 8% in 2026
Rishi Ranjan Kala
New Delhi
India’s natural gas demand is expected to fall roughly 8 per cent y-o-y in 2026, with the fertilizer sector likely to post the steepest decline, as the West Asia conflict and the closure of the Strait of Hormuz almost choked off half of the liquefied natural gas (LNG) imports from the region. The International Energy Agency (IEA), in its latest Q3 2026 gas market report, anticipates that the world’s fourth-largest LNG importer’s natural gas demand is likely to decline around 8 per cent y-o-y in 2026. However, the IEA pointed out that despite a significant softening in gas demand, India’s weak domestic gas production kept LNG imports up on the year.
SOFTENING DEMAND
The West Asia conflict has significantly altered, albeit temporarily, India’s LNG consumption dynamics and supply sources. For instance, in February 2026, the IEA projected India’s total natural gas consumption to hit 103 billion cubic meters (bcm) per year by 2030. This represented a nearly 7 per cent annual average growth rate between 2023 and 2030, far in excess of the previous five years’ CAGR of less than 2 per cent.
Between January and April 2026, India’s natural gas demand declined 4 per cent y-o-y, reflecting strong price sensitivity across key consuming sectors. Demand trends diverged by end-use. Fertilizer production recorded the largest absolute decline, falling more than 0.4 bcm or 7 per cent y-o-y, despite its designation as critical to agricultural productivity and food security under the Natural Gas (Supply Regulation) Order 2026, issued by the government in early March 2026 shortly after the de facto closure of the Hormuz.
PETROCHEM DOWN
Petrochemical output also contracted sharply, by 21 per cent y-o-y. By contrast, gas use in the residential and commercial sectors—mainly city gas distribution for compressed natural gas (CNG) in transport and piped natural gas (PNG) for households and small industry—increased around 12 per cent y-o-y.
The IEA projected that Asia’s natural gas demand is expected to decline by 0.5 per cent in 2026 as higher LNG prices spur gas-to-coal switching in the power sector and lead to lower operating rates across gas- and energy-intensive industries.
The IEA noted that India’s domestic gas production remains on a declining trend, recording 22 consecutive months of year-on-year contraction since July 2024 and falling 4 per cent y-o-y in 2026. Against this backdrop, LNG imports totalled around 11 bcm over the period, up 1 per cent y-o-y despite the West Asia supply disruption. Monthly inflows were volatile, with strong deliveries in January, followed by declines in March (down 16 per cent y-o-y) and April (down 7 per cent y-o-y) amid the onset of the Middle East supply disruption, before rebounding in May (up 7 per cent y-o-y).
