📰Inflation Drops to Record Low | Daily India Briefing

Today, we break down what India’s record-low inflation means for its rate cuts and future economic growth.

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Macro

• Large state refiners are seeking oil from Russia, Africa, and the US for 2026. Orders have started showing from Indian Oil Corp with low-sulfur grades from those 3 regions in focus. Indian Oil is one of the few large refiners still looking at Russian oil along with Nayara Energy. 

• Data suggests that the RBI has bought $2 billion (₹178 billion) of bonds and sold $20 billion (₹1.8 billion) in dollars.The moves restrict borrowing costs while keeping the rupee afloat to support corporate growth and investment. All eyes are on an American FTA to quell the external shocks and turmoil in Indian markets.

Equities

• Italian stationery company Fila is looking to sell its stake in Doms India through IPO. Doms is valued at $1.8 billion (₹156.6 billion) of which Fila owns 26 percent. The issue with dealmaking is that Doms is worth 3x Fila but does a third of the revenue. 

• Garage Ventures, owner of brokerage Groww, rose 31 percent after its $752 million (₹66.9 billion) IPO. Groww is now worth $9.1 billion (₹811 billion) making this the second best performing IPO this year for large companies. Groww has 14 million active users and has the largest share of the online brokerage market. 

• The National Commodity and Derivative Exchange is launching a mutual fund distribution platform. This will allow more investors to get access to funds, particularly in tier 2 or 3 cities, and present more competition to the BSE and NSE. 

• Adani is planning an investor event in November in Singapore, where management will meet investors, banks, and credit rating agencies.The latest outreach is a part of a series of steps to regain momentum after scandals have rocked it in recent years. Earlier steps included vows to cut down on leverage and a $2.8 billion (₹249.3 billion) rights issuance for existing stakeholders.

Alts

• Noel Tata is resconsolidating his empire by remaking the trusts' board after Ratan Tata's passing. The board of SDTT is now in accordance with Noel; the next step is to curry favor at SRTT given both trusts own 67 percent of Tata Sons which controls the group of 30 companies. 

• ​​Wall Street is expanding hiring for middle and back office in India after H1-B curbs. JP Morgan now has 20 percent of their workforce in India and other banks, hedge funds, and private equity funds are following suit. These global capability centers are expanding rapidly with total employment expected to be 2.8 million by 2030. 

• Investment firm Lighthouse Canton is doubling its India business to $10 billion (₹890 billion).Wealth management is spearheading the development but the firm is also looking to raise $250 million (₹22.2 billion) across 2 private credit funds while building an equity and broking and lending business.

Policy

• Putin spoke to Modi over phone and announced a visit to India on December 5th. The visit will involve his participation in a plenary session on Indian-Russian ties that week. India is not a signatory to the Rome Statute to arrest Putin on arrival. 

• The government is subsidizing airlines for operating flights to 'ghost' airports.The UDAN plan will cover the difference in fares to dormant airports as compared to busy ones, plus costs for empty seats. The goal is to balance out urban centers (overpacked) with rural ones (eerily dormant).

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Inflation Drops to Record Low

India’s inflation rate hit a record low in October, cementing expectations that the RBI will accelerate its easing cycle as falling food prices drive a sharper-than-expected cooling in consumer costs. CPI rose only 0.25 percent y-o-y, the lowest reading ever since the current data series began in 2012, well below economists’ forecasts of 0.4 percent. The historic reading was fueled by an equally historic 5.02 percent drop in food prices. At this point, food is facing deflation on the back of surplus rains, improved crop supplies, and a September GST cut that reduced prices on several household staples. 

A few things to keep in mind: core inflation inched up to 4.40 percent from higher gold prices (though core sans gold and silver was just 2.64 percent); the huge drops in inflation are also due to base effect since 2024 saw such high inflation; deflation is actually bad for the Indian economy since it weighs down on rural incomes and overall demand. 

Economists now expect inflation to come in under both the 2.6 percent projection for the current fiscal year and the long-term 4 percent target. While the central bank has warned that inflation could rebound in the next quarter as base effects fade, the latest data suggest it has room to move faster on rate cuts. It is far easier to imagine a 25-50 basis point rate cut in the upcoming December meeting. 

Markets welcomed the news. Indian equities extended their winning streak to a third session ahead of the release, while benchmark 10-year bond yields fell two basis points to 6.46 percent. Traders are now pricing in a higher probability of a December rate cut, with some expecting a follow-up move as early as February. The RBI has already reduced its policy rate by 100 basis points since February but paused in October to assess the effects of earlier easing.

The switch from restraint to stimulus will be a welcome move for consumers and the government, who will be excited to see a rate environment conducive for future growth. Rate cuts will make corporate investment far cheaper in a time where companies ranging from pharma to big tech are looking to invest billions of dollars in India.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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