THIS AFTERNOON: India concludes FTA with New Zealand

Good morning, lovely people, and happy FRIDAY. We are wrapping up the week with a close look at India's agrarian economy, where fertilizer has quickly joined crude oil as a critical geopolitical vulnerability amid the ongoing regional war and maritime chokepoints.

Meanwhile, the conflict is also cooling cross-border capital flows, with Gulf investors pumping the brakes on new commitments to Indian alternative investment funds until the economic fallout becomes clearer.

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TRADE — India and New Zealand will ink a comprehensive freetrade agreement (FTA) this Monday, April 27, New Zealand’s Prime Minister Christopher Luxon said in a post on X. The pact is targeting bilateral trade of USD 5 bn within five years and plans to secure USD 20 bn in direct investment into India over the next 15 years.

A new market opens up: Negotiations, launched in March 2025, were concluded in under nine months. The agreement is expected to grant near-zero duty access for Indian exports, benefiting sectors such as textiles, pharmaceuticals and engineering goods. India will liberalize tariffs on around 70.3% of tariff lines, covering 95% of bilateral trade between the two countries.

What’s changed? The pact opens 118 services sectors and eases mobility, including visas for 5k Indian professionals annually and extended post-study work rights for students. In addition, Indian pharma exporters will benefit from faster market access as New Zealand accepts existing inspection approvals from the US, the UK and Europe’s pharma regulatory bodies, reducing approval timelines and lowering compliance friction for Indian firms.

Why it matters: Unlike conventional FTAs, this pact introduces a rebalancing clause that links market access to investment delivery. If New Zealand falls short of the USD 20 bn commitment, India can recalibrate or suspend specific trade concessions.

Market watch

HSBC has downgraded Indian equities to “underweight” from “neutral” in its second cut in under a month, flagging rising risks to earnings as energy prices surge, Reuters reports.

“India now looks less attractive than North East Asian peers in the current macro setting,” an HSBC analyst told the newswire. It sees pockets of value in private banks, base metals, and healthcare, but argues the broader investment case has weakened.

Earnings at risk: HSBC expects the current consensus earnings growth forecast of 16% y-o-y for 2026 to face downward revisions. It estimates that a 20% rise in crude prices could shave off around 1.5 percentage points from earnings, coming on the heels of higher input and energy costs.

Why it matters: Foreign investors have pulled out over USD 18.5 bn so far in 2026, while the Nifty and Sensex benchmarks have already declined 6-8% y-o-y, underperforming regional peers. More risks await with uncertainty around global demand and potential disruptions from AI in India’s IT services sector.

Data points

25.2k — That is the projected number of ultra-high net worth individuals (UHNWIs) in India by 2031, up from 19.8k currently, as per a report by real estate consultant Knight Frank. The country’s b’naire count is expected to rise 51 % from 207 to 313 over the same period, on the back of sustained wealth creation across technology, industrials and capital markets.

India now ranks sixth globally in UHNWI population, with Mumbai accounting for 35.4% of the total number.

The big story abroad

The international press everywhere is leading with news of the extended ceasefire between Lebanon and Israel, set to last three weeks now instead of expiring on Sunday. The extension came after Trump hosted Israeli and Lebanese officials in the Oval Office for a round of talks, a day after Israeli strikes killed at least five people including a journalist.

Meanwhile, oil prices surged to USD 106.87 following reports of Iran boarding ships in the Strait of Hormuz and that air defenses in Iran were engaging what it said were “hostile targets.”

Over in business news, Meta and Microsoft are both planning staff reductions this year. Meta is set to lay off 10% of its workforce in May, while Microsoft is offering long-serving employees voluntary retirement for the first time, with an eye to offer redundancy to 7% of its US workforce.

AND- Intel’s shares surged 19% in afterhours trading after its 2Q revenue forecast beat analyst expectations, helping extend its 81% rebound so far this year as demand for its server processors — used for AI in data centers — booms.

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