📰Domestic Funds Save Stock Market, Government Reacts to Tariffs, Shriram Wants Lending License

Good evening, 

Welcome to the best way to stay up-to-date on India’s financial markets. Here’s what’s in today’s newsletter:

• Indian equities experienced a near-record inflow from domestic funds on Monday,

• Indian officials call Trump’s tariffs an “opportunity of a lifetime,”

• and Shriram Finance, one of India’s largest non-bank lenders, seeks a lending license.

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

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—Shreyas, [email protected]

Market Update.

Domestic Funds, Not Retail, Save the Stock Market.

Indian equities experienced a near-record inflow from domestic funds on Monday, a move that helped cushion the blow to local markets during what has been recorded as the worst-ever session for Asian stocks. Domestic institutions poured in $1.4 billion (₹121.2 billion) on a net basis — a figure approaching the record $1.6 billion (₹132 billion) seen back in October. Overall, there is still strong homegrown confidence amid global headwinds. Meanwhile, global funds net sold $1.1 billion (₹90.4 billion) of Indian shares, underscoring the contrasting dynamics at play.

Why buy? The resilience of Indian equities, despite a tariff-induced selloff that rattled global markets, can be partly attributed to the country’s relatively low exposure to the US economy. This unique positioning has allowed domestic investors to take advantage of local market undervaluations, resulting in almost $24 billion (₹2.1 trillion) worth of share purchases this year, compared to over $14 billion (₹1.2 trillion) in foreign fund outflows. Such robust activity from local institutions is not only helping to stabilize markets but is also sending a strong signal of confidence in the underlying fundamentals of the Indian economy.

Investors are now turning their attention to the upcoming policy decision by the RBI, where economists widely expect further interest rate cuts. This anticipated monetary easing is viewed as a crucial factor that could inject additional momentum into the stock market, reinforcing domestic buying trends and supporting equity valuations in the face of ongoing global turbulence.

In a market environment marked by significant international volatility, the actions of domestic funds have emerged as a critical pillar of support. Their near-record buying demonstrates a clear commitment to Indian equities, offering a counterbalance to the cautious stance adopted by foreign investors. As policymakers prepare to announce measures intended to bolster economic growth, sustained domestic confidence is likely to remain a key asset for the local markets in navigating these challenging times.

Government Officials See Trump Tariffs as “Opportunity of a Lifetime.”

While Trump’s reciprocal tariffs have unleashed global turmoil, India sees an “opportunity of a lifetime” amidst the chaos. At the India Global Forum in Mumbai, Commerce Minister Piyush Goyal outlined a vision where shifting supply chains and mounting trade tensions could finally recalibrate a system he deems lopsided — a system that took shape when China joined the WTO nearly 25 years ago. Goyal asserted that China’s meteoric rise had come at the cost of fair trade, and that today's disruptions could prompt a much-needed reset.

The global market has been rocked by sweeping tariff measures, wiping out $10 trillion (₹850 trillion) in equities and sending shockwaves across Asian shares. Yet, while nations scramble to retaliate, India has chosen a notably different path. Instead of following suit with counter-tariffs, New Delhi is channeling its energies into negotiating a balanced bilateral trade deal with the United States — an approach that capitalizes on its robust domestic demand and structural resilience. Analysts acknowledge that even if tariff pressures result in a modest 20-40 basis point growth drag, India’s diversified economy is well positioned to weather the storm.

Manufacturing shifts: The shifting global trade dynamics are already prompting major multinationals to rethink their supply chain strategies. For instance, Apple is increasingly shifting production to India to safeguard against the uncertainties of tariff-induced disruptions. Beyond the US, India is actively courting other trading partners, including the EU and the UK, further solidifying its status as a critical node in an emerging network of fair trade practices.

In a strategic maneuver designed to preserve long-term interests, India is also taking a cautious stance on Chinese investments. By restricting access for players like the EV giant BYD and favoring alternatives such as Tesla, New Delhi is recalibrating its investment policies to align with national priorities. This measured approach signals a broader intent not only to mitigate immediate volatility but also to carve out a new, strategically advantageous position in global commerce.

Shriram Finance Wants a Primary Lending License.

Shriram Finance, one of India’s largest non-bank lenders, is positioning itself to join an elite group of entities authorized to underwrite government debt. Such a move underscores the firm’s ambition to deepen its integration into the nation’s burgeoning bond markets. According to sources familiar with the discussions, the company has sought the RBI’s nod to establish a primary dealership by launching a dedicated entity.

Strategic timing: In India, primary dealers — comprising select banks and securities firms — play a crucial role in underwriting sovereign debt auctions and maintaining sufficient trading liquidity to support the government’s borrowing program. With federal government bonds now totaling $1.3 trillion (₹112.5 trillion) as of early April, Shriram Finance’s pursuit of a dealer license comes at a time when increased infrastructure spending is drawing multinational investors and driving up bond trading volumes. Such strategic positioning is seen as a natural progression for the lender, whose services span consumer products including automobiles and gold.

The market reacted positively to the news, with Shriram Finance’s stock climbing by as much as 5.6 percent. This development not only reflects investor confidence but also hints at broader implications for the firm’s future credibility and expanded role within India’s financial system.

Analysts view the potential license as a critical opportunity for Shriram Finance to enhance its network and credibility across the market. As foreign investors increase their bond market exposures, especially with India’s inclusion in major global indexes, and as long-term holders such as insurance and pension funds ramp up their participation, the licensing would offer Shriram Finance a more entrenched role in shaping India’s financial landscape. This strategic move, pending regulatory approval, could redefine the company’s market presence and signal a broader shift among non-bank financial institutions in India, as they increasingly become pivotal players in the government’s efforts to fund critical development initiatives.

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Gupshup.

Macro

• Asian LNG falls to a 1-year low with trade wars stoking demand fears. Asian LNG fell to $11.37 mmBtu since there could be lower consumption in both China and India with a prolonged trade war. This could still be a one-off if countries start to buy up LNG before the hotter summer months. 

• China is boosting Indian rapeseed imports after putting tariffs on Canada. The animal feed goes for around $200-235 per ton. India historically does not import heavily from China, even though it constitutes a third of total production globally.  

• India's rupee rally is driving hedging from importers and margin calls to banks. Importers took advantage of a rupee rally to buy dollar/rupee forwards to lock in prices for their imports. In doing so, they bet on the rupee potentially weakening further before March, about which they were correct. Banks were then margin called. Overall, hedging activity is up 75 percent y-o-y, which represents success in RBI Governor Malhotra’s plan to make Indian companies more self-reliant.  

Equities

• India rejects BYD's $1 billion (₹85 billion) investment plan in favor of Tesla. Commerce Minister Goyal argued that India has to consider national security when looking at who is allowed to commit to FDI. Allowing Tesla and working on lowering tariffs while other countries mount reciprocal approaches demonstrates how India has aligned itself with the US recently.  

• Titan Jewelry sees revenue boost with shares up 5 percent.Up until revenue projections, analysts assumed that Titan would underperform given the rapid rise in gold prices. Domestic and international demand buoyed that bearish expectation, but tariffs have resumed that fear now.  

Alts

• Nuvoco, a cement maker, seeks a private loan of $140 million (₹11.9 billion) to buy Vadraj Cement. The credit facility will have a tenor of 4 to 5 years. Nuvoco has turned to private funding since public banks are less keen on funding M&A deals due to RBI guidelines limiting debt financing for equity purchases from banks.  

Policy

• CM Fadnavis sees Mumbai becoming a global supply chain leader in the future. He sees opportunities in textiles and apparel with global tariffs set across Southeast Asia. Additionally, he brought up $200 billion (₹17 trillion) in investment pledges from January to help scale growth across the entire state of Maharashtra. 

• India is formalizing incentives for critical mineral recycling across 24 types this year. There has already been $166 million (₹15 billion) set aside in a 5-year plan to increase mining. The government also scrapped customs duties in February on a dozen critical substances to boost renewable energy and EV production.  

• India is rolling out Himalayan Buddhist teaching in monasteries in the Himalayas to counter China. A BJP spokesperson said this is aimed at making sure China cannot control monasteries in the Himalayas.  

See you Wednesday.

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.