Mumbai: Retail investors, drawn by the superior returns from international markets compared to local equities in the last year, are rushing to allocate money to mutual fund schemes that bet on overseas equities. Amid the dash to put money in these top performers, they are overlooking a crucial detail: many of these exchange-traded funds are at a 20-25% premium to their current values, leaving them exposed to any sharp reversals.

Currently, many of these schemes do not accept fresh subscriptions because they have hit the central bank’s overseas investing limit for mutual funds. The industry currently operates under a $7-billion limit for international mutual fund schemes and an additional $1-billion window for ETFs. The industry first hit this ceiling in February 2022, and since then, only schemes that haven’t exhausted their individual limits – or those where redemptions have freed up space – have been able to accept subscriptions. This resulted in a sharp spike in demand for ETFs, which are traded like stocks on exchanges – with investors buying them at premiums to their net asset values – the daily prices.

“Retail investors blindly buy ETFs, and there is no attempt to look at the premium or discount to the NAV,” says Chetan Nandani, founder, Prime Care Investments.

Currently, the Nippon India Hang Seng ETF trades at a 21% premium to its NAV, while the Mirae Asset Hang Seng Tech ETF trades at a premium of 23%. The Mirae Asset S&P 500 Top ETF trades at a premium of 18%, the Mirae Asset NYSE Fang+ ETF at 19%, while the Motilal Oswal Nasdaq 100 ETF trades at a premium of 2-3%.

“Overseas ETFs can no longer create new units to meet additional demand. However, since they trade on the exchanges, investors can still buy in the secondary markets,” says Kunal Valia, founder, Statlane – a Sebi-registered research analyst. “This has led to crowding into a handful of overseas ETFs, due to which these ETFs are trading at a premium way higher than the NAV.”

As per data from Value Research, international funds, on average, have returned 28% over the last year, compared with Nifty’s 12.8%.
RBI-imposed overseas limits have kept many US-focused mutual fund schemes shut for fresh subscriptions. While investors can bypass these curbs by using the Liberalised Remittance Scheme to buy ETFs abroad, the route comes with high transaction costs and the added hassle of separate brokerage accounts and compliance paperwork. Another alternative is to buy international funds set up in GIFT City, but the minimum investment of $5,000 makes it accessible only to larger-ticket investors. Investors who bought these international ETFs from the secondary market run the risk of sharp drawdowns if the RBI eventually decides to lift this limit. In such an instance, the lofty premiums on many of these products could evaporate quickly.

“Such investors carry a huge risk. The premium on these funds can disappear overnight if RBI were to increase or open up the limits,” warns Nandani. “If that happens, such investors could see a straight capital loss of 20-25% on these ETFs.”

ET Intelligence Group: A sharp fall in IDFC First Bank‘s stock price on Monday, following the discovery of a fraud at one of its branches, has significantly dented its valuation multiple. While the correction may tempt value-seeking investors, caution must be observed not to fall in a valuation trap. Past examples such as RBL Bank and IndusInd Bank where a financial institution faced similar situations show that the affected lenders struggled to claw back the lost ground and regain higher valuation multiples. In addition, such instances may also affect reputation and depositors’ trust.

In the case of IDFC First Bank, the price-book (P/B) multiple inched up gradually to nearly two over the past three years from around one, aided by improving asset quality. In addition, the mid-tier bank also took efforts to revive its net interest margin to around 6% from under 2% seven years ago by shifting its focus on consumer lending and reducing corporate exposure. This makeover has attracted value investors over the past few years, supporting the stock price. The stock hit a 52-week high of 87 in the first week of January and continued to trade closer to this level in subsequent weeks.

This however changed on Monday when the stock crashed by 16% to ’70 from the previous session’s close. Monday’s closing price was nearly 20% lower than the 52-week high level. The bank’s P/B has shrunk to 1.3, the lowest in over three years. However, investors need to wait before making fresh purchases as the stock is likely to remain under pressure given the possible impact of the latest fraud.

IDFC Bank informed stock exchanges on Saturday about fraudulent activities in accounts linked to the state government at its Chandigarh branch, amounting to ‘590 crore. The Haryana government has de-empanelled IDFC First Bank and AU Small Finance Bank from parking of bank deposits. Outflow of government funds may put pressure on current account- savings account (CASA) of banks at a time when they are still facing slower growth in deposits. Sector experts say, a part of government deposits may move to public sector undertaking banks over the medium term. BSE PSU Bank index rose 1.4% outperforming Sensex’s 0.6% rise on Monday.
“This episode could prompt other states to reassess their comfort with smaller banks,” a banking analyst told ET. “For mid-sized and smaller lenders, the risk of losing state government business has clearly risen after this incident.”

IDFC First Bank has said that recoveries will help cushion the financial impact of the fraud. Analysts, however, caution that recoveries in such cases are typically slow. “If any third party chooses to pursue litigation, the recovery process could be significantly delayed,” the analyst said.
As per the Reserve Bank of India’s circular ‘Provisioning pertaining to Fraud Accounts’, banks are required to provide for the entire amount involved in the fraud. This provisioning can be done immediately upon classification or spread over a period of upto four quarters. For IDFC Bank, if the entire amount is provided in a single quarter, the bank may be forced to report a net loss given that it reported a profit of ‘503 crore in the December quarter.

Asian shares fell at the open after fresh anxiety over the impact of artificial intelligence on company profits roiled Wall Street, while uncertainty over tariffs added to traders’ concerns.

The MSCI Asia Pacific Index edged down 0.2%, with shares in South Korea — a bellwether for AI investments — falling 0.5%. Attention later will turn to mainland China’s markets, which are set to reopen after the Lunar New Year holiday period.

The moves in Asia came after the S&P 500 Index slid 1%, with tech, delivery and payment shares hit as Citrini Research laid out the potential AI risks to various industries. International Business Machines Corp. tumbled 13% in its worst day since October 2000 as Anthropic said its Claude Code could help modernize COBOL, a programming language mainly run on IBM computers.

Amid lingering uncertainty over President Donald Trump’s tariffs, concerns about AI-driven disruption are prompting traders to dump shares of any company seen at the slightest risk of being displaced. Those worries have also grown despite solid results from megacaps amid doubts over whether big investments in the technology will pay off soon.

“The software selloff is a reminder of what can happen when momentum-driven sectors shift into reverse,” said Steve Sosnick at Interactive Brokers. “The broader, more important question is: How many sectors can go into reverse before they drag the broader market along with them?”

While software companies have been among the hardest hit, insurance brokers, private credit firms, cybersecurity and even real estate services stocks in the US have all been caught up in the so-called AI scare trade.
Asian shares have outperformed, with MSCI’s regional gauge rising 12% this year compared with a 0.1% decline in the S&P 500 over the same period. That marks the index’s strongest start to a year relative to the US benchmark on record.In other corners of the market, Treasuries and gold held their gains from the US session, when traders pared back risk and sought haven assets. Bitcoin continued to trade below $65,000. The dollar was little changed in early trading on Tuesday.

In other commodities, oil steadied as Trump said his preference was for a nuclear deal with Iran ahead of talks between the two nations this week.

Meanwhile, questions over US tariffs added to the downbeat mood on Monday.

After the Supreme Court’s decision Friday to nix Trump’s “reciprocal” tariffs, the White House announced plans to replace the prior levies with a new, across-the-board 15% tariff on US imports. The European Union froze ratification of its US trade deal amid the uncertainty.

The US is readying a spate of additional national security investigations that would enable Trump to impose new tariffs, as the administration seeks to rebuild his global tariff regime.

The administration is considering new national security tariffs on a half-dozen industries, the Wall Street Journal reported, citing people familiar with the plans.

“The push and pull with tariffs is likely to be a distracting theme for markets for the remainder of the year, albeit with less volatility than the initial shock last April,” said Michael Landsberg at Landsberg Bennett Private Wealth Management.

A new analysis finds prospective homebuyers have seen their purchasing power rise in the last year due to higher incomes and lower mortgage rates.

Zillow published a report on Monday that found a median-income U.S. household can now comfortably afford a $331,483 home with a 20% down payment. It found that the typical mortgage payment is 8.4% lower than it was a year ago when excluding taxes, insurance and assuming a 20% downpayment. 

Mortgage rates have fallen from an average of 6.96% in January 2025 to 6.1% last month, while incomes have ticked higher to give a median-income household an extra $30,302 in buying power compared with a year ago due to shifts in mortgage rates and household incomes.

“A more than $30,000 gain in buying power is meaningful for households that have been stretched thin by high rates. It can mean the difference between settling and choosing,” said Kara Ng, senior economist at Zillow.

RENT BECOMING MORE AFFORDABLE FOR MANY AMERICANS AS MARKET STABILIZES

“That doesn’t suddenly make this market affordable for everyone, but it does crack open doors that had firmly shut when rates peaked,” Ng added.

Zillow’s report noted that with the recent changes in household income and mortgage rates, the purchasing power of homebuyers is now at its highest level since March 2022, when mortgage rates were still below 5%.

The most recent low point for affordability was October 2023, when the median household could afford a $272,224 home as mortgage rates averaged 7.62% that month – the highest average for any month since 2000. 

OHIO GOVERNOR SAYS ENDING PROPERTY TAXES COULD PUSH STATE’S SALES TAX TO 20%

The latest dip in mortgage rates provided the biggest boost to homebuyers’ purchasing power in the nation’s most expensive housing markets.

Zillow noted that a median-income household in San Jose, Californina, has gained nearly $74,000 in buying power from a year ago – the largest gain among major metropolitan areas.

San Francisco buyers saw a boost of $56,115, and they were followed by peers in Washington, D.C. ($48,881), San Diego ($46,505) and Boston ($46,390). 

The number of homes that are affordable for a median-income household has also increased from a year ago by about 82,300 homes, Zillow found, with about 447,000 homes listed in January.

US HOME PRICES ARE RISING – BUT THESE FAST-GROWING MARKETS REMAIN AFFORDABLE

The 447,000 affordable home listings represent about 40.3% of total listings, an increase from 34.8% last year. 

Markets where home values have declined over the last year make even more homes available to median-income buyers, boosting purchasing power alongside the lower mortgage rates.

Houston led the country in the growth of affordable home inventory, with nearly 4,000 more homes listed for sale that are within reach for median-income buyers when compared with last year.

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Other metros with significant jumps in affordable home inventory are Phoenix with 3,434 more than last year, Dallas with 3,267, Miami with 2,981 and Atlanta’s gain of 2,279, Zillow found. Each of those markets has seen home values decline from last year.

Volvo Cars is recalling over 40,000 of its flagship electric EX30 SUVs because of a risk of battery packs overheating and catching fire.

The recall involves replacing modules in the high-voltage battery packs in the SUV, which is a crucial model in Volvo’s push to compete with cheaper Chinese brands. The news was first reported by Reuters.

The recall covers a total of 40,323 model year 2024-2026 EX30 Single-Motor Extended Range and Twin-Motor Performance cars that have the high-voltage cells. Volvo is a Sweden-based automaker that is majority-owned by China’s Geely.

VOLVO RECALLS MORE THAN 450,000 VEHICLES OVER BACKUP CAMERA ISSUE

Volvo said it plans to replace affected units free of charge and is urging owners to continue limiting their charging to 70% until repairs can occur to eliminate the fire risk.

“Our investigations have identified that in very rare cases, the affected vehicles can overheat when charged to a high level. In a worst-case scenario this could lead to a fire starting in the battery,” Volvo told FOX Business in a statement.

The automaker said, in total, 40,323 cars are affected globally; of those, it has “identified 189 in the U.S. that will be inspected and fixed if necessary.”

VOLVO REVERSES GOAL TO MAKE ONLY EVS IN 2030

The automaker first told EX30 owners in over a dozen countries – including the U.S., Australia and Brazil – in December to park their vehicles away from buildings and cap charging at 70%, according to regulatory filings and the company.

Volvo may face a high cost for replacing the battery packs, as a Reuters analysis based on what a Chinese battery maker might charge resulted in an estimate of $195 million, excluding logistics and repair costs. Volvo said the calculations were “speculative in nature” and that it’s in discussions with the supplier.

The automaker is pursuing deeper integration with its parent company, Geely, while the batteries were made by a Geely-backed joint venture known as Shandong Geely Sunwoda Power Battery Co. Volvo indicated the supplier has fixed the problem and will supply the new battery cells.

NISSAN RECALLS OVER 640,000 VEHICLES FOR ENGINE AND GEAR ISSUES

Andy Palmer, an auto industry veteran who oversaw the launch of Nissan Motor’s Leaf EV in 2010, said that Volvo has less room for missteps than its rivals because its safety reputation is a central part of its identity as a company.

“Volvo can’t afford a safety issue because that strikes at the heart of their brand,” Palmer said.

Volvo said it is contacting the owners of affected cars to advise them about the next steps in the recall.

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Reuters contributed to this report.

In an era where artificial intelligence dominates boardroom conversations and quantum computing looms on the horizon, a sobering reality check has arrived. KPMG’s newly released Global Tech Report 2026, drawing insights from 2,500 technology executives across 27 countries, paints a picture of an enterprise landscape caught between transformative ambition and operational paralysis.

Key Points

• Rapid AI Integration : 88% of organizations are already embedding AI agents into their workflows, signaling a significant global shift from pilot programs to operational scaling.
• Adaptive Strategic Planning : Because the fast pace of innovation can make tech plans obsolete before implementation, organizations are moving toward flexible, agile strategies that prioritize speed and enterprise-wide coordination.
• Workforce Evolution : High-performing organizations project that by 2027, tech teams will likely consist of a small permanent human core orchestrating expansive, AI-augmented ecosystems.
• Redefining ROI : Realizing value from tech investments remains a challenge due to varying organizational readiness; executives are encouraged to update KPIs to better capture the indirect and unique business value generated by AI.

The central thesis is unambiguous: organizations stand at the threshold of what KPMG terms the “Intelligence Age,” yet most remain fundamentally unprepared for what this transition demands.

The Maturity Paradox: Plans Without Progress

The report’s most striking revelation concerns what analysts describe as the “maturity paradox.” Despite unprecedented investment in emerging technologies, most organizations find themselves trapped in perpetual experimentation mode. The journey from pilot programs to scaled implementation remains frustratingly elusive for the majority.

• Barriers to Maturity : Despite bold ambitions, many organizations are hindered by the “intensifying challenges” of tech debt, rising cost pressures, and a lack of specialized talent.
• Future Tech Horizons : Beyond current AI, leaders are urged to prepare for the disruptive potential of quantum computing—which demands superior security—as well as the unpredictable implications of AGI and Artificial Superintelligence (ASI).
• Data-Driven Insights : The report’s findings are based on a comprehensive survey of 2,500 senior tech executives across 27 countries and eight major industries, reflecting a global consensus on the need for digital maturity.

This is not a failure of vision. Technology executives understand the stakes. What they are grappling with is something far more insidious: the intensifying challenges of technical debt, relentless cost pressures, and acute talent shortages that collectively function as gravitational forces, pulling organizations back toward the status quo even as they strain toward innovation.

The data is particularly revealing. While organizations have bold plans to “uplift maturity in 2026,” the obstacles preventing them from realizing their tech goals suggest that aspiration and achievement exist in parallel universes for many enterprises.

The ROI Reckoning: Beyond the Vanity Metrics

Perhaps no finding demands more critical attention than the report’s examination of return on investment. The technology sector has long suffered from measurement myopia, an obsession with deployment metrics, user adoption rates, and feature releases that obscure the fundamental question: Are organizations actually creating value?

KPMG’s research suggests that ROI on tech investments varies dramatically based on factors including readiness, diligence, organizational agility, and most crucially, organizational courage. The report explicitly challenges executives to move beyond conventional ROI measurements, particularly for AI tools, where traditional metrics often fail to capture the complexity of value generation.

This represents a mature acknowledgment of an uncomfortable truth: the typical pattern of ROI for AI initiatives frequently involves being based on indirect and often misleading benefits rather than demonstrable business outcomes. For an industry that prides itself on data-driven decision-making, this admission of measurement inadequacy is both refreshing and alarming.

The Agentic Revolution: From Pilot to Permanence

The most forward-looking element of KPMG’s analysis centers on what Zack Kass, former Head of Go-to-Market at OpenAI, describes as a “sharp move from pilots to ROI in the next year.” According to the research, 88 percent of organizations are already embedding AI agents into workflows, products, and value streams.

But here is where the analysis becomes genuinely provocative: Kass predicts that by 2027, high-performing organizations expect approximately half of their tech teams to consist of permanent human staff, with the remainder orchestrated through small, durable human cores managing large AI-augmented ecosystems.

This is not an incremental change. It represents a fundamental reimagining of how technology organizations function. Yet the report stops short of addressing the profound ethical, cultural, and practical implications of this transition. Questions remain about workforce reskilling, career progression in hybrid ecosystems, and who bears the social cost of this transformation.

Strategic Agility in an Age of Constant Obsolescence

The report correctly identifies that with the fast pace of innovation, tech plans are often obsolete before implementation. This observation points to a strategic crisis that transcends technology: how can organizations plan for a future that refuses to remain fixed long enough to be planned for?

KPMG’s prescription of coordinating investment priorities across the enterprise, building clarity around strategic decision-making, creating cultures that leverage the best of technology, and ensuring the foundations of data and resilience are sound, but may prove insufficient. These recommendations assume a stable enough environment for coordination and planning to remain meaningful activities.

What may be required instead is a more radical reimagining: organizations that treat strategy as a continuous adaptive process rather than an annual planning ritual. Technology leadership must become less about selecting the right technologies and more about building organizational systems capable of rapid experimentation, learning, and adaptation.

The Quantum and AGI Horizon

The report’s discussion of emerging technologies beyond current AI capabilities, particularly quantum computing and artificial general intelligence, highlights an essential but often overlooked leadership responsibility: preparing for discontinuities.

As KPMG notes, agentic AI commands attention while quantum provides immense computing power with security implications. Meanwhile, AGI and artificial superintelligence represent possibilities that are simultaneously distant and potentially transformative. The challenge for technology leaders is maintaining focus on near-term execution while building organizational flexibility for technological shifts that remain fundamentally unpredictable.

Conclusion: Leadership Beyond Technology

What emerges from KPMG’s comprehensive research is a portrait of technology leadership that transcends technical competence. Success in the Intelligence Age demands the ability to balance ambition with pragmatism, to measure value with sophistication, to build adaptive strategies in unstable environments, and to prepare organizations for futures that may look radically different from the present.

The executives surveyed for this report understand these challenges intellectually. The question that will define the next several years is whether they can translate that understanding into organizational reality, moving from plans on paper to sustained competitive advantage in practice.

For those waiting for certainty before acting, KPMG’s research offers a clear message: the time for tentative experimentation has passed. The Intelligence Age is not approaching. It has arrived. The only question remaining is whether organizations will lead, follow, or become obsolete.

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