Monopoly is not good for the market. Duopoly doesn’t help either. So, equity investors in India will soon have an option beyond the National Stock Exchange and the BSE with the country’s top commodity exchange jumping into the fray.
The National Commodity and Derivatives Exchange (NCDEX) this week said it raised about Rs 770 crore from local and foreign investors as it gears up to launch equity trading in 2026.
US-based high-frequency trading firm Tower Research is investing Rs 34 crore while Kenneth Griffin-founded Citadel Securities is putting in Rs 17 crore. Indian online broking firms Zerodha and Groww are also investing in NCDEX, as are well-known stock market investors Radhakishan Damani, Ramesh Damani, Madhusudhan Kela and Sunil Singhania. Other Indian investors include Kotak Mahindra Life Insurance, JM Financial and Acacia Partners.
NCDEX, which was set up in 2003, dominates agricultural commodity trading in India. It received in-principle approval from the Securities and Exchange Board of India in July to launch equity and equity derivatives trading. The company said last month it will invest Rs 500-600 crore to build a tech-driven equity and equity derivatives platform.
Why is NCDEX getting into equity trading? Well, equity trading is important to NCDEX’s survival as SEBI keeps banning trading in several farm commodities from time to time to control volatility in prices of food items.
But what could NCDEX offer to retail investors that the BSE and NSE don’t? NCDEX says there is potential to expand the equity market since, unlike BSE and NSE, its trading members and platform mostly cater to smaller towns and rural areas.
It also intends to offer innovative products. These could, for instance, include exchange-traded products (ETFs) for retail investors to invest in Farmer Producer Organizations. Another product could be agri-focused real estate infrastructure trusts (REITs) to channel capital into farming infrastructure such as warehouses, cold chains, and logistics.
Of course, it could take a long time for NCDEX to make its mark in equity trading given the dominance of NSE and BSE. Still, it has taken a few steps forward and attracted some marquee investors. Now, it must follow through with its plans.
Zip, Zap, Zoom
India just clocked another lap as the world’s fastest-growing large economy. And this time, it feels like the lead might stick, fingers firmly crossed.
The April–June quarter, the first stretch of the new financial year, saw GDP surge 7.8%. That’s not only higher than the wildest forecasts of analysts, it’s a cool 130 basis points above the Reserve Bank of India’s projection. To put it in context, growth was 7.4% in January–March and 6.5% in the same quarter a year ago. Clearly, India has shifted gears.
So, what fuelled this sprint?
Services, the economy’s marathon runner, delivered a two-year high growth of 9.3%. And the race doesn’t seem to be slowing. Flash PMI for August hit an all-time high of 65.6, after already topping 60.5 in July. Remember, anything above 50 signals expansion. Manufacturing too kept pace, expanding 7.7%. Agriculture was the only modest performer, but even there, a 3.7% growth rate is no small feat.
But here’s the twist: the strongest tailwind came not from output, but from prices—or rather, the lack of them.
That headline 7.8% is “real” GDP growth, calculated by stripping inflation out of the nominal number. Nominal GDP growth, the raw, unadjusted figure, was actually just 8.8%, its weakest in three quarters. Normally, that gap between nominal and real is wider. But this time inflation was almost missing in action.
Wholesale inflation in April–June averaged below 0.3%, retail inflation settled at 2.7%, and together they dragged the GDP deflator down to a wafer-thin 0.9%, the lowest in six years. In simple terms, real GDP growth ended up only 100 basis points shy of nominal. When inflation shrinks to a whisper, the numbers sing louder.
So, does this mean India didn’t really grow as fast as the headline suggests? That’s where the glass-half-full, glass-half-empty debate begins.
Sceptics argue that nominal GDP matters more, since it measures actual incomes in rupees. Optimists counter that incomes mean little if inflation devours them, so low inflation lifting real growth is worth celebrating.
In truth, both sides have a point. What’s undeniable is that India is running with a rare tailwind—strong demand at home, services firing on all cylinders, and inflation giving a free pass. Whether this turns out to be a short sprint or a long race, the April–June quarter has reminded the world that India’s growth story is far from running out of breath.
GST 2.0
It was planned as a two-day meeting. Many expected fireworks, perhaps even a first-ever voting. Instead, the GST Council wrapped up its business in a single day. What was supposed to be stormy ended with calm, as states and the Centre reached consensus without the need for a vote.
The outcome was anything but routine. The Council passed the most sweeping indirect tax reform since GST was first rolled out. India now moves to a simplified structure of two principal slabs of 5% and 18%, along with a higher 40% slab for sin and luxury goods.
The earlier system of 5%, 12%, 18% and 28%, topped by a cess, has been replaced. More importantly, most items have been moved into lower slabs, creating what could be a powerful push for consumption.
How big a push? The calculators are out. Even the most conservative estimates suggest a boost of at least 0.2% of GDP, with some analysts projecting as much as 0.6%. The government’s own math comes from the Rs 48,000 crore in revenue it is giving up through rate cuts. The larger number includes the end of the compensation cess, which was introduced to repay loans taken to cover states’ revenue shortfalls. With repayment due this year, the cess will be scrapped.
The list of items becoming cheaper is long. Insurance premiums are off the tax net altogether. Everyday essentials such as hair oil, soap, shampoo, toothbrushes, toothpaste and packaged foods now fall into the 5% slab, down from 12% or 18%.
The real kicker, though, is in consumer durables. The GST on air-conditioners, televisions, small cars and most motorcycles has been cut from 28% to 18%. These are exactly the products where a price drop can nudge fence-sitters into buying or upgrading. Cement too has moved down from 28% to 18%. If that translates into lower housing costs, it could spark a multiplier effect across the economy.
Garments and medicines will also see reductions. In fact, nearly 99% of products are set to become cheaper. Even many of those shifted up into the 40% bracket may see a net fall in price. The reason is simple: these products currently attract both 28% GST and an additional cess, making taxes on them more than 40% in most cases. Once the cess is scrapped later this year, the effective tax burden will actually decline.
These rate cuts will also help many sectors mitigate the impact of the 50% tariff imposed by the US recently.
The Council has delivered a reform that is both structural and symbolic. For households, it means relief at the checkout counter. For the economy, it is a bet that consumption, not just construction, will drive the next leg of growth.
Market Wrap
Thanks to the tailwinds from GST reforms, India’s equity benchmarks covered most their losses made in the past few weeks. The NSE Nifty 50 and BSE Sensex rose 1.3% and 1.1%, respectively, this week.
Mahindra & Mahindra was the top performer, adding more than a tenth to its market cap after the government, contrary to some reports, kept GST rates on electric vehicles unchanged. Other automakers, including Eicher, Hero MotoCorp, and Bajaj Auto, also ended firmly in the green. Bajaj Finserv gained over 5% on expectations of higher demand for consumer durables. The NBFC is the top financier in the segment.
Most IT stocks, however, were in the red after reports on Friday suggested the US was considering tariffs on technology services. The news remained unconfirmed, with at least one agency denying it had published such a report. Insurance stocks also fell on concerns over how companies will avail input tax credit now that GST on premiums has been scrapped.
Other Headlines
- US trading firm Jane Street files appeal against SEBI in Securities Appellate Tribunal
- Supreme Court dismisses challenge to the government’s rollout of 20% ethanol-blended E20 fuel
- EU trade chief Maros Sefcovic to visit India next week to discuss free trade agreement
- Amazon acquires non-bank fintech lender Axio to get access to direct lending business
- Tata Motor’s Jaguar Land Rover unit hit by cyber attack; production, sales disrupted
- Ashok Leyland to invest over Rs 5,000 crore in EV battery production
- Urban Company sets price band of Rs 98–103 for IPO, targeting a valuation of Rs 14,790 crore
- SEBI approves IPOs of boAt parent Imagine Marketing, Juniper Green Energy, Corona Remedies
- SEBI issues new rules to monitor intraday derivative positions
- India services Purchasing Managers’ Index jumps to 15-year high of 62.9 in August from 60.5 in July
- India manufacturing Purchasing Managers’ Index rises to 17-year high of 59.3 in August from 59.1 in July
- Tata Consultancy Services bags 550-million-euro order from Scandinavian insurance firm Tryg
- Japan’s SoftBank cuts stake in Ola Electric to 15.7% from 17.8%
- Coal India issues tenders to build 3 gigawatts of solar plants, 2 GW of wind power plants
- Tesla gets orders for around 600 EVs since India launch in July, reports Bloomberg News
- Deutsche Bank puts India retail banking business up for sale, reports Reuters
That’s all for this week. Until next week, happy investing!
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