📰Explained: Nifty50 Sees Worst Day in 30 Years

Three stories on Indian markets that you can't miss.

March 04, 2025

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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:

  • Modi tells business leaders to use ongoing U.S.-led trade wars as a time to establish India as a manufacturing hub,

  • Coal India raises debt to finance more ambitious projects,

  • and Indian stocks see their worst trading day in…30 years.

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

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—Shreyas, [email protected]

Market Update.

Modi Views Global Turmoil as Time to Grow.

As global supply chains undergo massive shifts due to geopolitical tensions, trade disputes, and economic realignments, Modi is urging Indian manufacturers and exporters to seize the moment and position the country as a trusted global supply chain hub.  

In an online address to business leaders, Modi emphasized that supply chain disruptions—worsened by factors like the pandemic, geopolitical conflicts, and rising trade barriers—present a golden opportunity for Indian firms. His vision aligns with a broader trend: global businesses are diversifying supply chains away from China, looking for reliable and politically stable partners.  

Modi's argument rests on two key pillars:  

  • Reforms: Since coming to power in 2014, Modi’s government has enacted key structural reforms, including GST, corporate tax cuts, labor law changes, and production-linked incentives for manufacturing. He assured businesses that this "reform consistency" will continue, signaling long-term policy stability. 

  • "Build in India For the World”: Modi positioned India as a dependable supplier of high-quality products—an implicit contrast to China, whose trade practices have drawn skepticism, especially in Western economies.  

FTAs: Modi’s comments also highlight India’s aggressive push for trade agreements with major economies.  

  • A trade pact with the US, expected to be finalized by fall 2025, as a hedge against the potential return of Trump's protectionist policies  

  • FTAs with the UK and EU, which could improve market access and boost India’s manufacturing exports  

  • Expanded partnerships in Asia and the Middle East, particularly in critical sectors like semiconductors, renewable energy, and defense manufacturing  

There are still a few challenges remaining for Indian growth. The infrastructure gaps still exist in the roads, ports, and logistics throughout the country. Compared to China, India lags in supply chain efficiency and cost competitiveness. There are some bureaucratic hurdles with red-taping, especially the complexities of foreign investing. The main issue remains the workforce readiness since India’s labor force is too skilled for available jobs. Until that’s solved, there will still be a lack of supply chain investments.

If India successfully leverages its policy reforms, trade negotiations, and global realignments, it could emerge as a credible alternative to China in global supply chains—especially in electronics, pharmaceuticals, automotive, and renewable energy sectors.

Indian Stocks Continue to Flounder.

India’s Nifty50 had its worst trading day in three decades, following 10 consecutive days of losses. The index is down 16 percent since its September record high. This sharp decline is primarily driven by global turmoil caused by the United States’ trade war with Canada, Mexico, and China, as investors pull money out of equities to hold cash to safe-haven assets like gold, which is trading at a higher price.

A long decline: The decline has been driven by foreign investors selling $14 billion (₹1.2 trillion) worth of stocks in 2025 due to fear of economic sluggishness and overall market risk. Chinese equities have also absorbed capital flows as Beijing becomes more aggressive in tech innovation and tariffs. Equities have also been overvalued: there used to be a few point premium in P/E ratios over peers but now the MSCI India Index has the weakest earnings revision momentum among EMs in the Asian region. Earnings revision momentum plots how earnings have changed over the last year to predict how they will continue to grow. 

Domestic sentiment has also taken a hit for the first time ever since it is estimated that 67 percent of Indian retail traders have never actually seen a multi-month correction. There is a declining share of small investors in cash equities, which hit a nine-month low in January. 

Bullishness: Some traders are looking for government stimulus measures that have already been announced and some that could be concocted. This could be cash injections or further tax adjustments like the ones already seen. FTAs with Europe, the UK, and the US could ease further concerns over a global risk-off sentiment. More fear in the market causes risk-off sentiment where investors rush into treasuries and safe markets like Switzerland. 

There are some technical indicators such as demand for put options—used for hedging downside—that have been reduced recently. There is more institutional optimism now as well with Citi, JPM, and Blackstone President Jon Gray turning more bullish, especially on private opportunities. Equities are a bit more of a grey area just due to the overvaluation and fervor of retail traders.

Coal India Turns to Debt to Finance Projects.

Coal India, the world’s largest coal miner, and a state-backed entity, is taking a significant step outside its conventional business model by raising debt for non-mining ventures. This marks a strategic shift from its long-standing practice of funding projects through internal capital. The company’s plan to borrow $229 million (₹20 billion) in the next fiscal year, with a 25 percent increase the following year, signals an evolving approach toward diversification and sustainability. This trend is not idiosyncratic to Coal India, but a growing macroeconomic change.

Why raise funding? The company needs to meet rising capital requirements which has led to external funding for the first time at the parent-company level. These rising requirements impact project financing but also day-to-day operations because of rising costs. Subsidiaries have borrowed before but the company has never borrowed at the highest level. 

Coal India is also aggressively expanding into clean energy, with plans to increase renewable capacity from 200 megawatts to 5 gigawatts by 2028. India as a whole wants 500 GW by 2030 and carbon neutrality by 2070, lofty goals that will require further financing. 

Confidence in energy transition: Coal India is confident in taking on diversification efforts given the debt rise versus using internal capital. Raising funds at India’s restrictive rates regime requires such a mindset now. Another reason why diversification seems more risky is Elliott Management’s call for other energy companies like British Petroleum to limit diversification spending. That being said, India is behind the curve on clean energy giving Coal India a larger runway. 

Changing energy market: The miner also expects to see demand shocks for the coal market as global environmental transitions happen. While it is pursuing clean projects, there will also be thermal power plant construction going on. The company is also buying up stranded assets—dirty fuel sites like power plants that already exist but will eventually be worth nothing—to maximize cash flow in the short term.  

Essentially, coal and other plants will stay in India’s energy mix as the country continues to develop. Various green funds have called out India for being noncommittal towards carbon offsets but the transition will continue to be gradual.

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Gupshup.

Macro

Equities

Alts

Policy

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.