📰Jane Street is BACK | Daily India Briefing

Jane Street is back. India’s infrastructure output hits 3-month high. India’s real estate and infrastructure investment trusts are accelerating their debt fundraising.

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Macro

• India added a record 22 GW of renewable energy in H1 2025, boosting momentum toward its 2030 clean energy target. Despite surpassing fossil fuel capacity, coal still dominates power generation, highlighting the need for storage and grid upgrades.

• A long-short strategy based on Indian equity analysts’ top picks has returned 105 percent over the past decade, far outperforming peers globally. This reflects India’s relatively inefficient market structure, which gives analysts a greater edge in forecasting due to slower price discovery and fewer short-sellers.

• Indian farmers have accelerated summer crop sowing thanks to above-average monsoon rains that boosted soil moisture. Government data shows a 4.1 percent increase in sown area, driven by incentives like higher support prices and hopes of a strong harvest.

• The Indian rupee weakened slightly to 86.2925 per U.S. dollar on Monday, down 0.2 percent, amid dollar demand from banks. However, broad dollar softness helped limit further losses, with analysts citing muted portfolio flows and RBI’s FX reserve moves for the rupee’s underperformance this year.

Equities

• Bonfiglioli’s India unit is planning a Mumbai IPO that could raise about $250 million (₹Done for 21.6 billion). The move follows a surge in multinational-backed listings amid strong equity market momentum.

• Positive earnings surprises from Reliance, ICICI Bank, and HDFC Bank are lifting sentiment after three weeks of market losses. Investors are now focused on Jio’s potential listing, data tariff hikes, and signs of retail loan recovery despite rising delinquencies.

• Air India received nine show cause notices for safety violations in the past six months, India's junior aviation minister said. The scrutiny follows a deadly Boeing 787 crash in Ahmedabad last month that killed 260 people.

• Milky Mist has filed for a $236 million (₹20.35 billion) IPO, aiming to raise $207 million (₹17.85 billion) through new shares. The dairy firm plans to use the funds to repay debt and expand its manufacturing and retail infrastructure amid rising demand for branded food products in India.

Alts

• Indian refiner Nayara Energy, part-owned by Russia’s Rosneft, is now demanding advance payments or letters of credit for naphtha shipments following new EU sanctions. The tightened payment terms highlight the broad impact of escalating restrictions on Russia-linked energy firms.

• Titan will acquire a 67 percent stake in Dubai-based jeweller Damas for $283 million, expanding its reach across the Gulf region. The deal gives Titan access to Damas’ 146 stores in six GCC countries, significantly boosting its Middle East footprint.

Policy

• India may allow sugar exports next season as favorable weather and expanded acreage point to a surplus cane harvest. The move aims to prevent a domestic surplus while balancing ethanol production and could further pressure global sugar prices.

• India is investigating 40 coal importers for allegedly over-invoicing Indonesian shipments, according to Coal Minister G. Kishan Reddy. The probe, led by the Department of Revenue Intelligence, follows concerns about inflated prices and mislabeling of coal cargoes.

• India’s opposition is set to challenge a controversial electoral roll revision in Bihar during Parliament’s monsoon session. Critics say the update could disenfranchise millions from marginalized communities, while the government defends it as a routine verification.

• India is protesting President Trump’s outreach to Pakistan’s military, warning it could strain U.S.-India ties. As tensions rise, New Delhi is cautiously recalibrating its relationship with China as a strategic hedge.

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1. Jane Street to Resume India Trading

India’s SEBI has lifted trading restrictions on Jane Street Group after the U.S.-based high-frequency trading firm deposited $567 million (₹48.4 billion) into an escrow account. The move follows SEBI’s interim ban earlier this month that accused the firm of manipulative trading practices in India’s equity derivatives market, the world’s largest by volume.

Jane Street has strongly denied SEBI’s claims of “intraday index manipulation,” asserting the trades were standard index arbitrage strategies. While the firm has been allowed to resume trading, it is not expected to re-enter the options segment immediately. SEBI has also mandated both the NSE and BSE to monitor the firm’s activities closely during the ongoing investigation.

The decision could provide a partial boost to Indian derivatives markets, which saw a sharp 30–36 percent decline in options premium turnover following Jane Street’s initial ban. The firm, a key liquidity provider, accounted for a significant share of market depth and pricing efficiency.

Still, the episode underscores SEBI’s growing scrutiny of high-frequency and algorithmic trading, especially after data revealed 91 percent of retail investors in derivatives incurred net losses in FY25. The regulator continues to push for deeper structural reforms, including extending derivative contract tenures and rebalancing risk in India's maturing capital markets.

2. India’s Infrastructure Output Hits 3-Month High

India’s core infrastructure sector recorded a modest yet encouraging rebound in June, with output rising 1.7 percent year-on-year, the fastest pace in three months, according to government data released on Monday. The uptick follows a revised 1.2 percent growth in May, indicating a steady improvement in momentum across critical sectors.

The infrastructure index tracks eight key industries: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, and contributes around 40 percent to the country’s overall industrial production. The June reading, while below long-term targets, suggests emerging resilience despite global headwinds and domestic uncertainties.

This recovery aligns with broader economic signals, including rising capital expenditure, state-level infrastructure pushes, and easing supply chain bottlenecks. Cement and steel output, often viewed as proxies for construction and infrastructure investment, likely played a crucial role in the growth uptick, aided by ongoing public projects in roads, railways, and urban development.

The data offers a cautiously optimistic outlook amid mixed signals elsewhere in the economy. While IT services remain under pressure due to weak U.S. demand and global trade dynamics remain volatile, domestic infrastructure activity appears to be stabilizing. Policymakers may view this momentum as validation of recent infrastructure-led growth strategies, particularly ahead of key fiscal decisions later this year.

With global oil and gas prices fluctuating, and monsoon impacts still unfolding, the coming months will be critical in determining whether June’s momentum can be sustained.

3. India’s REITs and InvITs Ramp Up Debt Fundraising Amid Falling Yields

India’s real estate and infrastructure investment trusts are accelerating their debt fundraising as falling interest rates and strong investor appetite make bond markets more attractive than traditional bank financing. In the first half of 2025, REITs and InvITs raised over $2.07 billion (₹178 billion), more than triple the amount raised during the same period last year, according to Prime Database.

The Reserve Bank of India’s 100 basis point rate cut and ongoing liquidity infusion have driven corporate bond yields lower, offering highly rated trusts a more cost-effective path to capital. As a result, entities like Embassy Office Parks REIT, IndiGrid, Cube Highways Trust, and Nexus Select Trust have increasingly tapped the bond market, with Embassy reportedly preparing for another issue.

“Bonds typically have fewer restrictions than bank loans, allowing REITs to use the fund across multiple properties within the portfolio,” said Lata Pillai, head of capital markets at JLL India. This flexibility enables REITs and InvITs to optimize capital deployment across multiple assets while maintaining mandatory payouts of at least 90 percent of net distributable cash flows to investors.

Analysts highlight that top-rated debt from these trusts is especially attractive to institutional investors seeking fixed-income exposure backed by stable, long-term cash flows. With infrastructure and commercial real estate gaining momentum, India’s asset-backed trusts are emerging as a key player in deepening domestic bond markets while enhancing investor returns.

See you tomorrow.

Written by Eshaan Chanda & Yash Tibrewal. Edited by Shreyas Sinha.

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