Dear Insighter,

Something strange happens when you stand in a concert queue. Time becomes elastic, strangers become temporary allies and everyone wants to get as close to the stage as possible.

I spent a recent evening doing exactly that, waiting with thousands of others to see The Weeknd. We queued for hours because standing in the pit is the only way to properly pay respects. When the lights dimmed and the first note reverberated through the stadium, the roar was not merely excitement. It was communion. Fifty thousand people had rearranged their lives, spent fortunes and crossed time zones to watch one person perform.

There is something almost theological about this. When an artist fills a stadium, when the crowd knows every lyric and chants every chorus, what must that feel like from the stage? To have tens of thousands of people screaming your name, fainting because you walked past them, treating your presence like a benediction? It is not difficult to understand why some artists begin to believe their own mythology. The crowd grants them a kind of divinity, and the transaction is complete: their belief creates the artist's aura, and the artist's performance justifies the belief. It is a feedback loop of faith, and it works because everyone agrees to participate.

But what exactly are we believing in? What is it about art, about performance, about shared experience that makes us so willing to surrender our rationality, our money, and our time? Perhaps it is simpler than we think. We are not really worshipping the artist. We are worshipping the feeling of collective belief itself, the temporary suspension of our individual isolation, the sensation of being part of something larger than ourselves. For two hours, we are not strangers. We are a congregation.

This is not a phenomenon confined to music. The same instinct that fills stadiums also fills markets, institutions, and nations. And when that belief falters, when the congregation begins to doubt, the consequences are profound. Krishnadevan V notes that India's stock market has been sliding for seven consecutive weeks, and the conversation has inevitably turned to taxes. Securities transaction tax applies even when you lose money, and capital gains tax greets you when you win. Lowering that burden would improve returns after tax without improving the businesses generating them.

Chokkalingam G offers a more structural explanation: twin liquidity deficits in the secondary market, something not seen in three decades. FPIs sold ₹1.7 trillion in 2025 and more than ₹2.6 trillion so far in 2026, while remaining net buyers in the primary market. An economy growing at 7.8% and rising corporate profits, yet the NIFTY down 10% over the past year.

Deepa Vasudevan’s reading of RBI consumer surveys adds another layer. The gap between reported growth and lived experience appears to be driven less by inflation than by anxiety over jobs and economic conditions. Employment is the bridge between macro growth and felt growth.

Kalluru Siva Reddy and Chinmay Joshi argue that the real credit question is not whether bank lending is expanding, but whether it is financing productive capital rather than consumption and working capital. The test is whether credit creates capacity and jobs.

Confidence becomes even more complicated when the institutions meant to provide it become sources of uncertainty. R. Gurumurthy, channelling Bertrand Russell’s In Praise of Idleness, argues that regulators should regulate markets rather than constantly remake them. Markets need clear, proportionate and consistently enforced rules.

Babuji K makes a related point across the RBI, SEBI and IRDAI. Public purpose may be similar, but outcomes depend on how it becomes a rule and how clearly that rule is communicated.

Anil Katia asks where the cost of India’s liquidity surplus should fall. Banks pay 6-7.5% on FCNR liabilities while earning about 5% on SDF balances, creating a 100-250 basis-point negative carry.

The bond market is no less conflicted. Yield Scribe notes that cheap overnight funding offers little comfort when carry positions have been damaged by mark-to-market losses. The disconnect between overnight rates and bond yields makes the next MPC decision only part of the problem.

Abhishek Upadhyay makes the case for a hawkish 25-basis-point hike, arguing that acting now could help the RBI avoid larger, more disruptive hikes later. Growth has surprised, inflation is broadening and oil is higher.

BasisPoint Groupthink asks the more fundamental question: what is the RBI hiking for? The central bank need not reveal its terminal rate; it does need a believable reaction function.

Sanjay Mansabdar widens the lens to global bond yields. If rates are returning towards what older generations would call “normal”, the world is anything but normal with government debt such a pervasive concern. India’s relatively prudent debt trajectory and growth could make some assets attractive.

Inside corporate India, Ritesh Kumar Singh suggests the next red flag may not be debt at all. It may be unpaid invoices. The warning comes when receivables consistently grow faster than sales, delaying the conversion of reported growth into cash.

Governance is another form of belief: shareholders need to trust the rules when interests collide. Krishnadevan V’s account of the Tata Sons dispute asks whether its governance framework can settle a consequential decision when the board and majority shareholder disagree.

At HDFC Bank, R. Gurumurthy examines a different governance question. Anup Bagchi’s three-year appointment resolves succession but raises another: if India wants globally competitive banks, should their chief executives really have such short horizons?

Rishikesh Patel and Krishnadevan V add a twist: both HDFC Bank and Kotak Mahindra Bank have chosen CEOs with substantial ICICI Bank experience. Bagchi’s move shows ICICI becoming a training ground for financial-sector leaders. But experience alone cannot restore HDFC’s lost valuation premium; he inherits a bank, not ICICI’s balance sheet or culture.

Insurance has its own crisis of faith. Vivek Kaul recalls discovering early in his career how high commissions could distort distribution. Two decades later, sellers remain better organised and represented than buyers.

Srinath Sridharan pushes the argument further: tighter controls on distribution commissions are overdue, but rules matter only if they change behaviour. Consumer centricity must show up in sales practices, claims, board decisions and consequences for institutions that fail customers.

Rabi N. Mishra and Komal Gupta turn to cooperative banks, where divided responsibility has long complicated accountability. As they grow larger and more complex, governance cannot stop at elections, board composition and compliance.

V Thiagarajan finds another blind spot at the intersection of AI and sovereign debt. Markets price productivity gains, but not necessarily the fiscal dividend. Faster productivity could expand the tax base and reduce welfare pressures; only disciplined governments will turn that windfall into debt stabilisation rather than fresh spending. Technology creates the opportunity; political economy decides whether it is captured.

Srinath Sridharan and Arjun Raghavendra M apply the same principle of accountability to free trade agreements. India has signed or concluded eight since 2021, but has never systematically published what they delivered. The contrast between weak first-generation outcomes and stronger UAE and Australia results makes the case for an annual scorecard. A rising power should not fear its report card.

G. Chandrashekhar questions another well-intentioned intervention: the cut in vegetable-oil import duties. Global supply is not in deficit, while India’s incoming Kharif oilseed crop is already under pressure. Consumer relief could become producer pain.

Krishnadevan V finds a similar policy trade-off in TRAI’s directive requiring short-duration voice-and-SMS plans without data. The move could reduce unwanted charges while exposing how much bundled data customers never needed.

R. Sridharan argues that NSE and BSE should be allowed to self-list under a framework that manages, rather than pretends to eliminate, conflicts of interest. SEBI should retain ultimate override authority. The point is regulatory maturity: sophisticated markets govern risk rather than pretend to eliminate it.

Ganga Narayan Rath and Chirayu Sharma report what happened when NSE finally arrived on the public market: a muted debut. The listing pushed 2026 primary-market fundraising beyond ₹1 trillion for a third year. The bigger question is whether market success should be judged only by turnover and exchange profitability, or also by investor outcomes.

Ujval Nanavati returns to the tax debate, noting that the Nifty 50 has fallen more than 6% since unexpectedly strong April-June GDP numbers. The problem is bigger than STT and capital gains: weak earnings, valuations, foreign flows, currency moves and reform all matter. When returns are scarce, every tax leak feels larger. Active individual traders are down about 20% and new entrants about 40%.

Arvind Mayaram asks why climate change has failed to generate the institutional transformation triggered by financial crises, wars or COVID-19. The problem is not information or technology, but institutions poorly aligned with global, long-term and intergenerational risks. Climate policy needs not merely more ambition, but institutions capable of converting ambition into outcomes.

Standing in that concert queue, surrounded by strangers who would become temporary family, I understood something about belief. It is not rational. It cannot be measured or modelled. But it is the invisible architecture on which everything else rests.

When belief frays, the numbers eventually follow.

The artist on stage feels like a deity because we grant them that power. The same is true of every system we build. Faith is the currency no central bank can print, and perhaps the one that matters most.

Until next time, may your faith hold and your returns be real,

Phynix

Also Read

How China’s New Investment and Export Controls Jeopardise India’s Economic Choices by Sharmila Kantha: India wants Chinese capital while Beijing decides what can leave—industrial ambition meets export-control gravity.

Indian Diplomacy in Crisis Mode by Rajesh Ramachandran: Washington’s Pakistan embrace, Russian oil pressure and US-China rivalry leave India balancing strategic autonomy on a knife-edge.

The SIR Conundrum and the Controversy Over Differences Among Election Commissioners by Amitabh Tiwari: The Election Commission’s credibility crisis is now an inside job, and the referee is arguing with itself.

El Nino to Reduce Kharif Production for 2026-27, Rabi Crops Also Under Stress by G. Chandrashekhar: El Niño turns the kharif maths ugly, and rabi is already looking over its shoulder.

Sarci-Sense: Why Has Everyone Become a Customer of Their Own Life? by Srinath Sridharan: When even happiness needs an ROI, we’ve turned life into a subscription we keep auditing.

The Opposing Forces Reshaping Global Finance by Mohamed A. El-Erian: Fintech pulls the world together while geopolitics pulls it apart—finance’s next five years will be a tug-of-war.

Lies, Election Lies, and Trump's Statisticians by Michael R. Strain: When official statistics become partisan ammunition, the real casualty is the trust markets and democracies run on.

Beyond this Newsletter

The BasisPoint app brings you our latest insights, analysis and updates as soon as they are published.

Download the BasisPoint app from Google Play or Apple’s App Store and stay connected to the ideas shaping India’s economy, policy and markets.

You can also follow us on WhatsApp Channel:
https://whatsapp.com/channel/0029Vb6wYey3wtb36FzRg52S