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

• RBI cuts cash reserve ratio, holds overnight rate,

• India plans to compromise with Trump and BRICs,

• And, Indian diplomats plan Bangladesh visits to defuse tensions.

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

If you have feedback on our newsletter or just want to chat about India, always feel free to reach out to me. You can also share criticism about the newsletter anonymously here.

—Shreyas, [email protected]

Market Update

Indian benchmark indexes posted their best week since June, with the NSE Nifty 50 rising 2.3% and the BSE Sensex gaining 2.4%, driven by financials following the central bank's cash reserve ratio cut, which eased monetary conditions.

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RBI Cuts Cash Reserve Ratio, Holds Overnight Rate

RBI decision: The MPC decided by a 4-2 majority to keep the benchmark repo rate unchanged for the eleventh straight meeting. The last meeting had a 5-1 vote, signifying that the tide is changing in terms of hawkishness among board members. This comes amid high inflation prints due to food but struggling GDP which has caused conflicting policy recommendations.

The RBI also announced a 50-basis point reduction in the cash reserve ratio (CRR) to 4 percent, effective in two tranches on Dec. 14 and Dec. 28, which will free up 1.16 trillion rupees in the banking system, according to Governor Shaktikanta Das.

What’s the CRR? The cash reserve ratio is the portion of bank deposits that must be kept on hand in case of a bank run. By cutting this rate, banks will have more capital to lend, which can also effectively lower the interest rates people pay on loans.

Markets reacted by staying flat after the RBI decision. The Indian rupee strengthened to 84.6875 against the U.S. dollar, although it still logged a fifth consecutive weekly decline, falling 0.2 percent after reaching an all-time low of 84.7575 earlier in the week.

India Plans to Compromise with Trump and BRICs

Earlier this week, Trump announced that he would set 100 percent tariffs on BRICs countries that looked to displace the U.S. dollar as the primary currency of trade or as the global reserve currency. India’s External Affairs Minister Jaishankar spoke at a conference in New Delhi this week to say that the relationship would require “give and take” to keep fully mended.

Why it matters: India’s largest trade partners are the U.S., Russia, and China, countries fully at odds with each other. While India and China relations have deteriorated causing U.S. companies to shift more operations to the former. Punitive tariffs would continue to set India back, hurt consumers in both countries and push India further into BRICs territory.

Yes but: Tariffs like these hurt all consumers in both the U.S. and India which makes implementation difficult. Additionally, India’s reliance on other BRICs countries has grown tremendously. India imports 36% of all military capability from Russia still and has to rely on importing Chinese manufacturing and intellectual capability for growth this next decade.

Indian Diplomats Plan Bangladesh Visits to Defuse Tensions

India’s Foreign Secretary is set to visit Dhaka for discussions aimed at repairing bilateral relations following weeks of tense exchanges. The discord stems from recent shifts in the federal government and concerns over the treatment of religious minorities.

Why it matters: Vikram Misri is scheduled to meet Bangladesh’s interim leader, Muhammad Yunus, amid growing tensions. Indian officials have accused Yunus of failing to safeguard the rights of Hindus, who make up 10 percent of Bangladesh's population. Historically, ties between the two nations have been robust, dating back to India’s support for Bangladesh’s independence from Pakistan. Relations further strengthened over the past 15 years under the leadership of Sheikh Hasina, a known ally of India.

You should know: New Delhi’s rhetoric has been highly critical following the deaths of hundreds since Sheikh Hasina was ousted from power. Muhammad Yunus has consistently denied these allegations. The reduction in diplomatic staff in Bangladesh is another troubling indicator, particularly for trade. India-Bangladesh trade has grown faster than any other country, surging from $2 billion (₹168.8 billion) in 2009 to over $15 billion (₹1.26 trillion) in 2022.

Gupshup

Macro

• The Reserve Bank of India maintained interest rates but cut the cash reserve ratio to inject liquidity into the economy, addressing slowing growth and persistent inflation while introducing measures to support the weakening rupee.

• India's live entertainment market has surged by 35% year-on-year, with 27,000 events held this year, driven by young, affluent audiences, as global music acts like Coldplay and Ed Sheeran sell-out shows and generate an estimated $708.5 million to $945.5 million in annual concert-related spending.

• India’s Ministry of Mines reports India will become self-sufficient in refined copper once Adani Enterprises' Kutch Copper plant, with an initial capacity of 500,000 metric tons, reaches full production by March 2025, ending the need for imports amid rising demand driven by sectors like construction, home appliances, and green energy.

• India's foreign exchange reserves increased by $1.5 billion to $658.09 billion as of November 29, 2024, ending an eight-week decline, according to the Reserve Bank of India.

Equities

• CEAT Ltd. will acquire Michelin's Camso brand for $225 million, gaining two manufacturing facilities in Sri Lanka, as the Indian tire maker seeks to boost its off-highway tire business and profit margins, following a challenging period marked by rising rubber prices and weaker demand that led to missed profit estimates in Q3 2024.

• Tata Power's newly built 4.3 GW solar module and cell manufacturing facility in Tamil Nadu, with an investment of 43 billion rupees ($508 million), will primarily serve the domestic market despite the exponential growth of solar exports from India, according to the company's CEO.

Alts

• LG Electronics' Indian arm has filed for an IPO valued at $1.80 billion (₹152.37 billion), aiming to capitalize on the country's growing consumer durables demand, with its parent company offering 101.8 million shares.

• Sweden's EQT, a private equity investor, has invested $6 billion in India over the last 18 months, surpassing its $5 billion target, focusing on sectors like healthcare, tech, real estate, and infrastructure, while raising $2.4 billion from exits such as Sagility India's listing.

• Russian oil producer Rosneft has invested $20 billion in India, with plans to expand manufacturing operations, while also strengthening ties through oil refining and trading partnerships, following a $12.9 billion acquisition of Essar Oil in 2017.

Policy

• India's ruling BJP has accused the U.S. State Department and "deep state" actors of collaborating with investigative journalists, opposition leader Rahul Gandhi, and financier George Soros to destabilize the country, despite strengthening ties between New Delhi and Washington.

• Indian police used tear gas and pepper spray to block Punjabi farmers marching to Delhi to demand better crop prices, reviving tensions over promises made during the 2021 protests.

• An Indian antitrust probe found no evidence of price collusion among DHL, FedEx, and UPS, clearing them of allegations filed by the Federation of Indian Publishers, according to a report under review by top officials.

• India's central bank has raised the limit for collateral-free agricultural loans to $2,364 (₹200,000) to help small farmers cope with inflation and rising input costs.

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.

1 USD = 84.67 Indian Rupee