📰10% Tariff on BRICS?

Good afternoon, 

Welcome to the best way to stay up-to-date on India’s financial markets. Today, we’re discussing

• Trump threatens BRICS with 10 percent tariff,

• Investors rotate into Indian corporate bonds,

• and markets traded flat today.

Then, we close with Gupshup, a round-up of the most important headlines.

Have a question you want us to answer? Fill out this form, and you could be featured in our newsletter.

—Shreyas, [email protected]

Market Update.

Trump Threatens BRICS Tariff.

The Indian rupee posted its worst single-day performance in three weeks on Monday, following a new threat from former U.S. President Donald Trump to impose a 10 percent tariff on BRICS countries—an economic bloc that includes Brazil, Russia, India, China, and South Africa. The rupee fell as low as 86.03 per U.S. dollar before settling at 85.85, down 0.5 percent on the day.

Trump, in a series of social media posts, announced that the U.S. would begin issuing “tariff letters” to nations aligned with what he called the “anti-American policies” of the BRICS group. The move sent shockwaves across emerging markets, pushing down currencies such as the South African rand and Chinese yuan, and raising alarms for Indian markets already wary of slowing global trade momentum.

For India, the fallout is especially concerning. As one of the more trade-exposed members of BRICS, India has worked to strike a delicate balance between strategic autonomy and economic engagement with the West. Although India’s bilateral trade with the U.S. remains strong, its BRICS membership—particularly its alignment with China and Russia on multilateral platforms—makes it a potential target under Trump’s blanket approach.

Analysts say the timing is particularly damaging. “Markets were expecting some progress on U.S.-India trade talks this week, but Trump’s BRICS remarks threw a wrench into that,” said Dilip Parmar, a foreign exchange strategist at HDFC Securities. The Reserve Bank of India may need to intervene if volatility worsens, he added.

Meanwhile, technical pressure also accelerated the rupee’s decline. A state-run bank dealer noted that stop-loss triggers were hit when the rupee slipped below 85.80, adding momentum to the sell-off. In the absence of positive news on the trade front, traders now expect the rupee to test the 86.50 level in the near term.

Indian Funds Turn Towards Higher-Yield Corporate Bonds.

India’s fixed-income investors are pivoting toward corporate debt as stable government bond yields and tighter liquidity push them to seek better returns. With the RBI maintaining its cautious policy stance and gradually draining banking system liquidity, spreads between government securities and high-quality corporate bonds have widened, creating fresh opportunities for mutual funds and insurers.

Two- and three-year AAA-rated corporate bonds now yield about 85 basis points more than comparable sovereign debt, prompting fund managers to adopt accrual-focused strategies and trim exposure to longer-term government bonds. “As long as there is no danger of policy reversing, the two-three-year bonds will respond to local liquidity... so, we have already reallocated funds from the long bonds to the 2–3-year corporate bonds,” said Sandeep Bagla of Trust Mutual Fund, noting the appeal of steady coupon income in a stable rate environment.

While mutual funds are targeting the shorter end of the yield curve, insurers like Bharti AXA Life Insurance see value in locking in attractive spreads in the five- to ten-year segment. This renewed focus on corporate credit underscores India’s evolving fixed-income landscape: as sovereign yields remain range-bound, high-grade corporate paper is emerging as a vital tool for yield-hungry investors seeking to protect returns without taking on excessive risk.

The shift highlights how local market dynamics, liquidity management, stable policy, and resilient corporate balance sheets are reshaping India’s debt capital markets in 2025.

Markets Close Flat.

Indian equity benchmarks closed nearly flat on Monday, as strength in consumer stocks offset broader market weakness, with investors treading cautiously amid escalating global trade tensions.

The Nifty 50 ended marginally lower at 25,461.3, while the BSE Sensex edged up 0.01 percent to 83,442.5. Broader markets underperformed, with the small-cap and mid-cap indexes slipping 0.4 percent and 0.3 percent, respectively. Nine of the 13 major sectoral indices ended in the red.

However, consumer stocks provided a silver lining. The Nifty FMCG index climbed 1.7 percent, led by a 6.4 percent surge in Godrej Consumer Products after the company forecast double-digit revenue growth for the June quarter. Hindustan Unilever jumped 3 percent, while Nestle and ITC gained over 1 percent each. Analysts cited hopes of rural demand recovery and a stable monsoon as additional drivers.

Reliance Industries, one of the heaviest stocks on the Nifty, also advanced about 1 percent, helping anchor the main index.

Market sentiment remained shaky following U.S. presidential frontrunner Donald Trump’s announcement that new tariff rates will be finalized by July 9 and take effect from August 1. Trump warned that countries aligning with the BRICS bloc—which includes India—would face an additional 10 percent tariff “with no exceptions.”

“Trade policy uncertainty has become a dominant risk for Indian equities,” said Alekh Yadav, head of investment products at Sanctum Wealth. “With valuations running hot, the market's on a tightrope—any earnings stumble this quarter could shake sentiment.”

The Nifty and Sensex currently sit about 3 percent below their record highs set in late September 2024.

Elsewhere, Indus Towers fell 3.9 percent after Macquarie downgraded the stock on growth concerns, while Eureka Forbes rose 2.4 percent following a partnership with Dixon Technologies to produce robotic vacuums.

Message from our sponsor.

Looking for unbiased, fact-based news? Join 1440 today.

Join over 4 million Americans who start their day with 1440 – your daily digest for unbiased, fact-centric news. From politics to sports, we cover it all by analyzing over 100 sources. Our concise, 5-minute read lands in your inbox each morning at no cost. Experience news without the noise; let 1440 help you make up your own mind. Sign up now and invite your friends and family to be part of the informed.

Subscribe to 1440 today.

Gupshup.

Macro

• India’s auto dealers have warned that geopolitical tensions, US tariffs, and China’s rare earth export curbs could dampen retail volume growth. Retail auto sales fell in June, with rising inventory days signaling potential oversupply risks for dealerships.

• India’s fuel demand fell 4.7 percent month-on-month in June to 20.31 million metric tons, according to oil ministry data. Despite the monthly drop, annual fuel consumption still rose slightly, reflecting mixed trends across gasoline, diesel, and LPG sales.

• The Indian rupee weakened 0.4 percent as regional currency losses and interbank dollar bids pressured it amid uncertainty over U.S. tariff policies. Traders said the move was mostly flow-driven while markets eyed upcoming U.S. trade decisions and BRICS developments.

Equities

• Indian equity benchmarks closed flat on Monday as gains in consumer stocks like Godrej Consumer offset losses in other sectors amid U.S. trade policy uncertainty. Analysts pointed to optimism around rural demand and steady monsoon rains boosting consumer sentiment.

• Capgemini will acquire US-listed outsourcing firm WNS Holdings for $3.3 billion (₹283.2 billion) to strengthen its AI services and expand in key markets like India, where WNS has a large operations base. The deal values WNS at a 28 percent premium.

• Indian solar module maker Emmvee has filed for a $351 million (₹30.1 billion) IPO to fund expansion. The Bangalore-based company plans to sell both new shares and founder stakes, with JM Financial and others managing the issue.

• Demand for weight-loss drugs is surging in India as Eli Lilly and Novo Nordisk compete for market share in the expanding obesity treatment segment. Rising obesity rates and growing patient willingness to try new medications have driven the market’s value fivefold since 2021.

• Titan Company’s quarterly domestic revenue rose 19 percent as higher gold prices boosted its jewellery sales. The company’s watches segment also saw strong growth, driven by increased prices and volumes.

Alts

• Curbs on Jane Street’s operations in India may deepen the ongoing slump in the country’s options market. While regulatory scrutiny has already reduced speculative trading volumes, analysts say the exit of a major player could create space for retail traders and other firms to step in.

• Sunil Mittal and Warburg Pincus have reportedly bid $720 million (₹61.8 billion) for a 49 percent stake in Haier’s India unit, valuing the company below its earlier $2 billion (₹171.6 billion) target. The potential deal may include a 2 percent stake for Haier India employees and a stock market listing within two years for the Chinese parent’s exit.

• Jio BlackRock Asset Management has raised over $2.1 billion (₹180.2 billion) in its debut mutual fund offerings since securing its license in May. The joint venture between Reliance’s Jio Financial Services and BlackRock attracted strong interest from over 90 institutional investors and more than 67,000 retail investors.

• Thousands of refugees have fled into India’s Mizoram state following clashes between rival anti-junta groups in Myanmar’s Chin State. Mizoram, which has long hosted Chin refugees due to ethnic ties, is now sheltering around 4,000 new arrivals needing urgent aid.

Policy

• An Indian court rejected Turkish airport ground handler Celebi’s plea to overturn the revocation of its security clearance after Turkey supported Pakistan in a recent conflict. The ruling is another setback for Celebi’s India operations, which were halted by the government in May on national security grounds.

• Pakistan’s army chief has rejected India’s claim that China actively supported Islamabad during their May conflict. He called the accusation “irresponsible and factually incorrect,” as tensions linger between the nuclear-armed neighbors despite a recent ceasefire.

• India’s markets regulator plans to step up surveillance to catch manipulation in the booming derivatives market. The move follows SEBI’s recent action against Jane Street for allegedly rigging stock indexes through large trades and options positions.

• Carrier has become the latest multinational to sue India over stricter electronic waste rules that have increased recycling fees for manufacturers. The legal challenge joins suits by Samsung, LG, Daikin, and Voltas, highlighting growing pushback as India ramps up its e-waste management enforcement.

See you Tuesday.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

Disclaimer: This is not financial advice or recommendation for any investment. The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.