SOFTWARE & SEMICONDUCTORS (Part 2)

By: Dr K C Gupta, YBB Personal Finance

CONTRARIAN INDICATORS

AAII Bull-Bear Spread -3.2% (below average)
CNN Fear & Greed Index 65 (greed)
NYSE %Above 50-dMA 62.70% (positive)
SP500 %Above 50-dMA 70.40% (overbought, barely)

ICI Fund Allocations (Cumulative), 6/30/26
OEFs & ETFs: Stocks 63.07%, Hybrids 3.86%, Bonds 16.93%, M-Mkt 16.15%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 3.50-3.75%
FOMC 9/16/26+ hold
FOMC 10/28/26+ hold

Treasury

T-Bills 3-mo yield 3.86%, 1-yr 3.98%; T-Notes 2-yr 4.17%, 5-yr 4.36%, 10-yr 4.68%; T-Bonds 30-yr 5.25% (normal yield-curve);
TIPS/Real yields 5-yr 2.12%, 10-yr 2.41%, 30-yr 3.00%
FRNs Index 3.771%

Bank Rates www.depositaccounts.com/



Stable-Value (SV) Rates, 8/1/26
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 4.15%
TIAA MYGA 4.60% (3-yr), 4.80% (5-yr), 4.85% (7-yr)
TSP G Fund 4.875% (previous 4.500%)

India Fear & Greed MMI 62.69 (greed)
Weekly ETFs: INDA -1.16%, INDY -1.47%, EPI -1.51%, INDH -0.95% | SPY +0.40%

The data above are as of Sunday preceding the publication date.

MARKETS

Bloomberg deferred including India for its global aggregate bond index. It said that more time is needed to assess the recent tax & capital gain reforms that are favorable for foreign funds investing in Indian bonds. The disappointment may lead to some selling of Indian bonds & rupee.

FUNDS

Many Indians want to invest abroad to participate in global trends & protect from declining rupee. But there are industry-wide limits on how much Indian mutual funds can invest in foreign securities ($7 billion) & ETFs ($1 billion). These aggregate limits have been reached & haven’t been changed. There are additional limits for individuals ($250K) working with specialized brokers & advisors, but that’s a small market for wealthy Indians. So, the channels for Indians to invest globally are artificially closed. As a result of this, many global funds in India trade at high premiums, but those will disappear overnight if RBI raises these limits.

SPACE TECHNOLOGY

Sateliot-India (parent Spanish Sateliot) is providing affordable LEO narrow-band IoT (NB-IoT) satellite connectivity for smart devices or equipment for agriculture, logistics, utilities, mining, etc. These services are based on 3GPP NB-IoT standards for Mobile Satellite Service (MSS) spectrum bands. Company is also in talks with local mobile networks to add last-mile satellite-mobile services.

SPECIAL TOPIC – SOFTWARE & SEMICONDUCTORS (Part 2)

Indian AI ecosystem is growing rapidly. There are government organizations & resources – IAIRO (Indian AI Research Organization), IndiaAI, etc. AI platforms include BharatGen, Sarvan AI & from several companies & startups. Several IITs & IISc are involved in AI R&D. Global companies are investing in Indian AI infrastructure – R&D, datacenters. There are also several foreign-domestic joint-ventures (JVs) to navigate the complexities of datacenter projects – land, power, equipment, approvals & permits.

MeitY: India must build own AI & cybersecurity. Reliance on software with foreign licensing can create access issues when least expected. Moreover, localized software are necessary to meet local needs, regulatory compliances & threats.

Indian multinational Persistent Systems subsidiary Galaxy German Holdings is buying German AI-IT-engineering firm Nagarro. It will enhance Persistent’s global footprint; it’s US subsidiary is Accelerite. German regulators are investigating potential leak(s) & trading in Nagarro stock ahead of the acquisition announcement.

Under Semicon 2.0, India will start taking equity in semiconductor (semi) startups. Government will match venture-capital (VC) investments through funding rounds A, B, C without seeking operational control. Government stake will be under 50% & founders can buyback when the company matures. If these startups are acquired, the government stake will be adjusted or paid back as any other stake. The support model for larger companies in semis will be royalty-type – the payback will be 1.5x government support when the supported projects generate revenues. India already has good capabilities in semi chip designs but is rushing to fill the semi manufacturing vacuum starting with low-end chips.

India is focusing now on low-end 28-110 nm semi chips manufacturing that are used in auto & other applications. Most advanced chips now are 2-3 nm. But those advanced chips have high demand & high margins, so low-end chips are being ignored & global shortages have developed. This approach is reasonable for semi chips production in India that started only in 2026.

For Part 1, see 10/17/25 issue.

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