đź“°Inflation at 6-Year Low

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

July 10, 2025

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Good afternoon, 

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

  • Inflation hits a six-year low,

  • India’s banking sector is facing its slowest rupee bond issuance in over a decade,

  • and IPOs could add $3 trillion to the total Indian stock market value by 2035.

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

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—Shreyas, [email protected]

Market Update.

Inflation Expected to Ease to 6-Year Low.

India’s consumer inflation likely fell to a more than six-year low in June, bolstered by easing food prices and a favorable base effect from last year’s sharp vegetable price spike, according to a Reuters poll of economists. The survey projects headline CPI inflation to cool to 2.5 percent in June from 2.82 percent in May, marking the longest stretch below the RBI’s 4 percent medium-term target in nearly six years.

A robust spring harvest and healthy wheat and rice stocks are keeping broader food price pressures contained, even as an uneven monsoon has lifted some vegetable costs. The moderation underscores India’s disinflationary run at a time when core inflation, which better signals domestic demand trends, remains steady around 4.3 percent.

For policymakers, the benign inflation trajectory offers some breathing room. The RBI surprised markets last month with a larger-than-expected 50 basis point rate cut and a shift to a neutral stance to shore up sluggish domestic demand. While the central bank has signaled limited immediate room for further easing, some economists now see scope for another rate cut later this year if supply-side shocks remain contained.

With GDP growth stuck near 6.5 percent, still shy of Prime Minister Modi’s 8 percent target, sustained disinflation could be a critical tailwind for household consumption and borrowing appetite. Monday’s official CPI data will be closely watched for signs that India’s rare window of subdued price pressures can hold, helping to balance growth revival and monetary stability in the months ahead.

India’s Bond Sales at 11-Year Low.

India’s banking sector is facing its slowest rupee bond issuance in over a decade as sluggish credit demand and ample system liquidity curb the need for fresh capital. Banks have raised just $691 million (₹59.2 billion) in additional tier 1 and tier 2 debt so far this year, a sharp 52 percent drop from a year ago and the lowest since 2014.

The slump is in stark contrast to India’s booming corporate bond market, where companies locked in record borrowings of $72.3 billion (₹6.2 trillion) in the first half of 2025, taking advantage of lower yields and robust investor appetite. But for banks, the equation looks different: credit growth, a key driver for fresh capital raising, has softened dramatically. Bank loan growth slowed to just 9.6 percent in the year through mid-June, compared to around 20 percent a year earlier, as private investment and consumption remain tepid despite the RBI’s aggressive easing cycle.

“There is adequate liquidity in the system, while loan growth is slow,” said Saswata Guha at Fitch Ratings, warning that lenders won’t rush to lock in higher-cost funding without clear avenues to deploy capital profitably.

The muted credit offtake has wider macro implications. India’s GDP expanded 6.5 percent last fiscal year, falling short of Prime Minister Modi’s 8 percent target tied to development and job creation. Fitch expects credit growth could recover to 12–13 percent this year, but downside risks remain if rate cuts fail to jumpstart private sector borrowing and spending. For now, banks appear content to wait on the sidelines until clearer signs of an investment cycle revival emerge.

Indian IPOs to Add $3 Trillion in Market Value?

India’s capital markets are poised for a transformative decade as an accelerating wave of IPOs could add as much as $3 trillion (₹257.2 trillion) in market capitalization by 2035, according to JM Financial’s vice chairman Vishal Kampani. With the country’s total listed market value hovering around $5 trillion (₹428.6 trillion) today, that projection underscores the scale of investor confidence in India’s long-term growth story.

This year alone, Indian IPOs have already raised more than $6 billion (₹514.3 billion), building on last year’s record $21 billion (₹1.8 trillion) haul, driven by blockbuster deals like Hyundai Motor’s India unit and other billion-dollar-plus offerings. Domestic investors have emerged as a key force, with pricing power shifting decisively from foreign funds to India’s increasingly deep local capital base, a structural shift that’s likely to shape the next wave of listings.

Upcoming deals from big names like Tata Capital, PhonePe, and even LG Electronics’ Indian arm point to a robust pipeline across financial services, tech, and consumer sectors. Kampani notes that transactions are getting bigger, with more deals surpassing the $1 billion (₹85.7 billion) mark as Indian firms tap equity markets to fund expansion in sectors from renewable energy to manufacturing.

The boom comes alongside a steady rise in M&A activity, up 18 percent year-on-year, as companies and private equity players strike strategic deals despite high valuation multiples. Together, the IPO and M&A momentum could provide a major macro boost to India’s investment cycle, supporting capital formation, job creation, and the country’s ambition to sustain 7–8 percent annual growth in the decade ahead.

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Gupshup.

Macro

Equities

Alts

Policy

See you Friday.

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.