Welcome to Samosa Capital’s evening briefing — the best way to stay up-to-date on India’s financial markets. Today, we’re talking about the rupee again, and then we’ll close with Gupshup, a round-up of the most important headlines.

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We’re Talking About the Rupee Again

The Indian rupee has declined to an all-time low of ₹85 against the US dollar due to Fed hawkishness, weak Indian growth, and Trump tariff rhetoric. This depreciation has also happened in the face of the largest RBI currency interventions ever, demonstrating the wave of long dollar bets.

The rupee's fall to ₹85 reflects a broader trend of currency weakness driven by a stronger dollar and global economic uncertainties. The Federal Reserve's recent guidance, signaling fewer rate cuts in 2025, has bolstered the dollar and intensified pressure on emerging market currencies, including the rupee.

While cheaper exports could benefit India, rising import costs are worsening the trade deficit, which reached a record $37.8 billion in November 2024 due to increased energy imports and a surge in gold purchases. To stabilize the rupee, the RBI has intervened in the foreign exchange market, drawing on its substantial reserves of around $700 billion. This intervention has limited the rupee’s decline to 0.25 percent since the Fed’s comments, outperforming other Asian currencies like the South Korean won, Malay ringgit, and Indonesian rupiah, which fell 0.8–1.2 percent during the same period.

However, further intervention risks reducing India’s import cover — its foreign exchange reserves divided by monthly import needs — which currently stands at 10 months. A cover below 9 months is typically seen as a bearish signal. Ironically, excessive intervention could devalue the rupee and Indian assets more than a natural depreciation.

The rupee’s future trajectory remains uncertain. Some analysts anticipate further depreciation due to hawkish U.S. policies under President Trump, while others view current market reactions as exaggerated. If Indian interest rates remain high and foreign portfolio investment inflows continue, the rupee could see bullish momentum in the coming months.

Gupshup

Macro

• Monetary Policy Committee is yet to give clear guidance on how it plans to balance the growth-inflation trap with rate cuts in 2025. Former Governor Das ended his tenure by emphasizing the importance of bringing down inflation – currently 1.48 percent too high – while new Governor Malhotra has emphasized growth.

• India is debating a steel duty amid surging imports, with Nippon Steel, JSW, and Jindal Steel accusing China of dumping low-priced steel in 2024. As China's domestic demand falls and India's infrastructure revamp drives steel demand, other ASEAN countries are also considering import duties.

Equities

• Zomato and Swiggy’s 10-minute delivery services are fueling India’s e-commerce boom, with online food delivery projected to reach $15 billion by 2029. With only 11% penetration in food consumption compared to 40% in China and 58% in the US, both companies are pursuing growth via in-house kitchens and restaurant partnerships but face challenges expanding beyond metropolitan areas.

• Ultratech’s $472 million (₹40.2 billion) acquisition of India Cements intensifies competition with Adani as cement giants race to expand capacity. The deal boosts Ultratech’s southern production and sales, aligning with its target of 183.5 million metric tons by 2027, which will require further acquisitions.

• Traders find shelter in pharma stocks amid rupee devaluation due to export potential. Pharma in India relies on exports, unlike most other industries. While the broader market has fallen nearly 5 percent this week, pharma is up 1 to 2 percent across the board since export power increases with a weaker currency. 

• India hits another all-time high with a $19 billion (₹1.6 trillion) IPO market. India has recently become one of the world’s most desirable issuance countries. This is an all-time high for IPOs but economists and banking analysts are already looking toward 2025. LG Electronics and Quest Global seem like assured offerings next year to set up more investment opportunities.

Alts

• Dutch regulators threaten Tata Steel with fines or factory closures if emissions aren't mitigated. Tata has 12 months to significantly reduce emissions at a coke plant or will be fined at least $28 million (₹2.4 billion). The company finds modifications to the plant within that timeframe nearly impossible, according to a statement.

• Large retail brokers prepare for revenue hit after options trading slumps. Large retail brokerages are preparing for revenue hits ranging from 10 to 30 percent in 2025. To make up for lost ground, they are preparing to launch new commodity options as the market continues to evolve. Institutional traders like Citadel are prepared to continue making money with estimates that India constitutes 5 percent of total revenues.

Policy

• Modi's visit to Kuwait aims to boost trade and defense ties through a growing trade balance of arms and energy products. Current bilateral trade is $10.5 billion (₹893.6 billion) and Kuwait is India’s 6th largest crude supplier. Both countries also recently created a joint commission to review and monitor trade, investment, and security.  

See you Monday.

Written by 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.