📰Meeting in Beijing

Three big stories in Indian markets you can't miss.

January 23, 2025

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

  • Indian and Chinese diplomats are meeting in Beijing on Sunday,

  • India’s Union Budget will focus on rural subsidies,

  • and, Japanese banks are increasing competition in loan markets.

  • Finally, we’ll close with Gupshup, a round-up of the most important headlines.

Have a question you want us to answer? Fill out this form and you could be featured in our newsletter.

—Shreyas, [email protected]

Market Update

The Nifty finished up 0.25 percent and the Sensex increased by 0.15 percent, both led by real estate, technology, and consumer durables. The rupee has traded flat throughout the week around 86.50, though it is uncertain whether the RBI has been intervening or if trade volume has been low.

Future of India: Expert Panel & Networking

Seats are running out for our upcoming “Future of India” expert panel and networking event on Wednesday, February 12, 2025, in New York City.

Our keynote speaker is Dr. Viral Acharya, who served as the deputy governor of the Reserve Bank of India, during which he oversaw India’s monetary policy, financial markets, and the central bank’s research.

Buy tickets here.

Indian and Chinese Diplomats to Meet in Beijing

India’s Foreign Secretary Vikram Misri will meet his Chinese counterpart during a two-day trip to Beijing starting Sunday, as announced by India’s External Affairs Ministry. As foreign secretary, Misri leads India’s diplomatic civil service and is responsible for executive policies determined by External Affairs Minister S. Jaishanker and Prime Minister Modi. 

Agenda: Talks will focus on political, economic, and cultural ties, in line with leadership-level agreements. Specifics have not been released, and will likely remain unknown until after the meeting.

For context: Relations soured after a 2020 border clash left 20 Indian soldiers and an unknown number of Chinese troops dead, leading to military buildups and restrictions on Chinese businesses in India. 

India curbed Chinese investments, banned over 250 apps from firms like Tencent and Baidu, raided telecom giants Huawei and ZTE, and expelled Chinese journalists, prompting reciprocal actions from China.

Why now? In October, India’s Modi and China’s Xi Jinping agreed to normalize relationships at the BRICS summit in Russia. In December, India’s National Security Adviser and China’s Foreign Minister discussed border management and confidence-building measures.

Who wins: Normalizing an economic relationship with China is key to India’s goal of fostering its domestic manufacturing output, as it would make it far easier for global businesses to move goods and materials between each country, allowing India to get integrated into global supply chains that already run deeply through China. India's imports from China rose to $102 billion, a 56 percent increase over four years, driving total bilateral trade to $118 billion and widening India's trade deficit by 75 percent. In FY 2024, China regained its position as India's largest trading partner, passing the United States by just tens of millions of dollars.

India’s Budget is Focusing on Rural Subsidies

Government sources revealed that Union Budget 2025 will focus on rural subsidies, such as increasing spending on food and fertilizer subsidies to $47.4 billion (₹4.1 trillion) to address the rising cost of living.

Finance Minister Nirmala Sitharaman will present the national budget on February 1. While urban demand and corporate investments have weakened, the rural economy — a major beneficiary of subsidies — is showing signs of recovery.

The specifics: Expect food subsidies to rise by 5 percent reaching $24.9 billion (₹2.15 trillion) due to higher procurement of rice from farmers amid rising storage costs. Cooking gas is going to double to $2.9 billion (₹250 billion) due to global energy prices going up and the BJP’s necessity to support lower-income households. Finally, fertilizer will stay unchanged at $19.7 billion (₹1.7 trillion) just to maintain agricultural productivity. These subsidies and others represent 8 percent of India’s total budget in this past fiscal year.

Japan’s Samurais Gain Popularity In Indian Debt Markets

India's lending market is experiencing heightened competition as Japanese banks aggressively expand their operations, driving loan prices down and increasing their risk appetite. Major Japanese financial institutions such as MUFG and SMFG are leveraging their freed-up capital to expand in India. This shift comes as they reduce domestic cross-holdings and seek higher returns abroad. 

In the past, these conglomerates only worked with government agencies, but now MUFG has emerged as the top offshore loan arranger for all Indian borrowers in 2024. Indian expansion and growing Japanese risk tolerance have led to the shift. 

Part of this rise is an expected surge in refinancings with $41 billion in dollar bonds and other Indian borrowing maturing this year. Japanese rates are still far lower than most markets making ‘Samurai’ refinancing an amazing alternative for Indians. Samurai bonds are yen-denominated debt securities issued in Japan by non-Japanese entities, such as foreign governments or corporations, and are subject to Japanese regulations. These bonds provide issuers with access to Japan's capital markets, allowing them to raise funds in yen. For investors, Samurai bonds offer an opportunity to diversify their portfolios with foreign issuers while investing in the local currency.

Gupshup

Macro

Equities

Alts

Policy

See you Friday.

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.