November, 2025

Dot-Com Bubble: Part Two

Mohit Dugar, CFA

It appears to be the year 2000 all over again, industry veterans and stalwarts might be having a déjà vu seeing the hype and investments AI is attracting day by day. Industry chatter has already started likening the AI boom to the 2000 era dot-com bubble with many calling it the AI bubble. Sky high valuations and billions of dollars in investment already poured in – all a reminisce of the past; this has led NVIDIA to become the first $5 trillion company in the world and has left the MAANG companies far behind. But, how long can this sustain?

On the US front, additional 100% tariffs were imposed on China in retaliation to the rare earth export curbs; however, a deal was signed, effectively pausing the additional tariffs on China in return for removal of restrictions on rare earth exports. On his recent Asia trip – President Trump signed a lot of critical resource deals including rare earths deal with Japan to diversify the supply away from China.

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Diwali season led bumper sales across India to the tune of ₹6.05 lakh crore, up 25% from last year – helped by GST rate rationalization and benign inflation, which as at an eight-year low figure of 1.5%. Record vehicle sales proved to be a life-line for the automobile sector.

Precious metals (gold & silver) were in very high demand after a stellar performance. Gold and silver touched an all-time high of around ₹1.3L per 10 gram and ₹1.8L per 1 kg giving a return of around 55% and 70% YTD respectively before correcting in the last week of October by around 5-10%. It was a dream run for precious metals foreshadowing equity. Silver outshined gold, there was so much demand that there was a supply squeeze in London which led to a sharp uptick in silver price and as a result there was a dearth of physical silver worldwide. In India also, the silver ETF were trading at a premium for around 10%. The gold-silver ratio is still trading at a premium of 20% from its historical average, indicating more upside for silver. However, the path forward looks treacherous and extreme caution should be exercised from here on.

In other news, a breakthrough was achieved and a truce deal has been signed effectively halting the war in Gaza – a step towards greater peace in the region. World leaders commemorated this development through a summit in Egypt.

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RBI in a landmark judgement has now allowed Indian banks to finance M&A deals – which earlier went to international institutions. This will allow the Indian banks to have a better competitive moat and have more skin in the game. Now, Indian banks will also be able to fund mega mergers. Also, the limit for loan against securities has been increased by the RBI ensuring more participation.

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On the macro front, private CapEx has seen a rebound and surged 62% in Q2FY26 taking overall investments to ₹34 trillion in H1FY26, 22% higher than H2FY25. The government has introduced a new mechanism for GDP calculation – set to debut from next year onwards. It will have a better representation of gig workers and unorganised sector. It will move the base for calculation from present 2011-12 to 2022-23.

There are also speculations that a US-India trade deal is imminent. If it materializes, the tariff may be slashed from the present 50% to 15% - a big win for the economy. As a precursor to the deal, India has started reducing Russian energy exports and has made a 10-year defense pact with the USA. All eyes remain on how both the countries play their cards and secure a deal best suited for them.

www.pinnaclefinvest.com

mohit@pinnaclefinvest.com

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