Your favorite Indian finance newsletter is evolving! Starting in January, you will receive a briefing Monday to Friday. From Monday to Thursday, we’ll give you quick summaries of three big stories, and Gupshup, a round-up of the most important headlines. Every Friday, we’ll pen a data-driven analysis that gives you deep insights into India’s economy.

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

Live Event

Seats are running out for our upcoming “Future of India” expert panel and networking event on Wednesday, February 12, 2025, in New York City. Buy now here, or earn a free ticket by sharing Samosa Capital with three friends.

Increased Rate Cut Expectations Impact Bonds and Stocks

India’s 10-year bonds hit a three-year low: The yield fell to 6.6928% by 10:00 AM IST (11:30 PM ET) — the lowest since 20220 — reflecting growing optimism about potential liquidity injections from the Reserve Bank of India. This decline follows weaker-than-expected GDP growth data for the September quarter (5.4 percent). It signals that the market expects the central bank to take on expansionary monetary policy, potentially moving to cut the overnight rate from its current 6.50 percent. The central bank could also reduce the cash reserve ratio or repo rate to support the economy.

Markets Rise, Kinda: Local shares have risen 2 percent this week in expectation of a rate cut this Friday. The small-cap gauge has also been increased to near its previous peak.

That being said, the most recent inflation print came in at 6.21 percent for October y-o-y, well beyond the RBI’s 4 percent upper limit. RBI Governor Das has been hawkish and has repeatedly signaled the central bank’s mission to cut inflation.

Rupee Just Keeps Falling

The rupee traded flat around 84.70 after devaluing from 84.30 just days before. A Reuters poll of FX strategists expects that it will fall below 85 rupees per dollar in the next six months.

Why it matters: The rupee usually trades within narrow ranges thanks to RBI interventions, but this time, the strong dollar overwhelmed the RBI's efforts, causing sharp fluctuations. President-elect Trump's 100% tariff threat on BRICS countries and weak 5.4% GDP growth led to significant foreign outflows.

Yes but: Foreign and domestic inflows supported the rupee as expectations of an RBI rate cut grew after economic growth stagnated. The likelihood of massive tariffs on U.S. trade partners seems low, and market optimism has waned as the dollar index (DXY) fell from 107 to 106.

International Adani Projects in Sri Lanka Continue

Adani Group is unfazed by U.S. bribery charges and continues to work on international projects, such as the Sri Lankan ports funded by American debt.

Why it matters: The ports are funded by $533 million (₹45.04 billion) in U.S. debt, now stalled. The funds, provided by the U.S. International Development Finance Corporation (DFC), were intended to develop a Colombo transshipment port to counter Beijing's influence in the region. The DFC stated that it is reviewing the Department of Justice's indictment and conducting further due diligence on the loan.

Keep in mind that Adani and the Sri Lanka Ports Authority formed a joint venture that must secure financing for the project to proceed. Adani has also faced setbacks in other international projects due to reputation or funding issues, including the $2.6 billion (₹218.4 billion) Kenya airports and power project and its partnership with France’s TotalEnergies in Adani Total Gas.

Gupshup

Macro

• India’s export restrictions have fueled a surge in cross-border smuggling, with gold being traded for food staples like sugar and grains along the Bangladesh border. This illicit barter trade, rising since 2022, disrupts official markets and undermines efforts to control inflation and revenue losses.

• India's services sector sustained robust growth in November, driven by strong international demand and record hiring, even as costs rose at the fastest pace in over a decade. The Services PMI held steady at 58.4, reflecting solid business activity, while confidence climbed to a six-month high, supported by expectations of continued demand. Despite firms passing on higher labor and material costs to clients, the sector’s resilience signals optimism about the broader economic outlook.

• India's smaller steel mills are grappling with reduced capacity and mounting unsold inventory due to an influx of cheaper Chinese imports, forcing some to cut production and consider layoffs. Despite a booming construction sector, India became a net steel importer last fiscal year, raising concerns about the long-term impact on infrastructure projects and steel-reliant industries. Smaller mills, which contribute 41% of national output and employ over 1.5 million people, have seen capacity utilization drop by nearly a third in recent months.

• India is expected to experience above-average winter temperatures, which could threaten the yields of key crops like wheat and rapeseed, as these crops require cold weather for optimal growth. If production falls, India may face pressure to import wheat and other staples to meet demand.

Equities

• Bharti Airtel has secured a multi-billion dollar agreement with Swedish telecom leader Ericsson to enhance its 4G and 5G networks across India. Set for deployment by 2025, this partnership aims to expand Airtel’s coverage in the booming smartphone market through advanced and flexible network solutions.

• Vodafone Group announced plans to sell its remaining 3% stake in India's Indus Towers through an accelerated book build, comprising 79.2 million shares. Proceeds from the sale will primarily go toward repaying $101 million in outstanding borrowings secured against its Indian assets. This follows the company's $1.82 billion sale of an 18% stake in Indus Towers earlier this year.

• India's largest airline, IndiGo, has filed a trademark infringement lawsuit against automaker Mahindra, alleging improper use of its "6E" branding in Mahindra's electric vehicle names. While Mahindra denies any conflict and claims proper trademark registration, IndiGo argues the similarity threatens the distinctiveness of its long-established aviation brand.

• India's renewable energy agency lifted its ban on Reliance Power, allowing the company to participate in clean energy tenders, following a court's intervention. The ban had been imposed due to a fake bank guarantee, but Reliance Power contested the decision, claiming it was a victim of fraud.

• Swiggy expects to achieve positive core earnings by December 2025, driven by the rapid growth of its quick commerce division, Instamart, following a smaller quarterly loss. The company plans to expand its dark stores and aims for Instamart's contribution margins to break even by late 2025, as it competes with rivals like Zomato and Reliance Industries in the booming quick commerce sector.

• Adani Group entities have approached India's securities regulator to settle charges related to shareholding violations at several of their listed companies. The violations, which date back to 2020, involve improper categorization of shareholding, and the group is seeking to resolve the issue by offering financial settlements.

Alts

• Standard Chartered has set a $200 billion target for new wealth assets over the next five years, focusing on affluent Chinese and Indian clients with cross-border financial needs. The bank plans to expand its team of relationship managers by 50%, upgrade technology, and invest in high-growth markets like India, China, Malaysia, and Taiwan. This strategy aligns with a broader pivot toward wealth management, mirroring moves by rivals like HSBC, as StanChart seeks to capitalize on shifting global trade dynamics and rising offshore asset demand.

• The U.S. State Department has authorized the potential sale of $1.17 billion worth of MH-60R Seahawk helicopter equipment and support to India, with Lockheed Martin as the principal contractor.

Policy

• India has expressed readiness to rebuild business ties with China following the resolution of their four-year military standoff along the Himalayan border. Foreign Minister Subrahmanyam Jaishankar emphasized that peace on the frontier remains essential for improving relations, as the two nations prepare for further diplomatic discussions.

• Nepal's Prime Minister, K.P. Sharma Oli, has shifted focus towards China for economic support, seeking to revitalize infrastructure projects under the Belt and Road Initiative. Oli's visit marks a break from tradition, as he bypassed India to engage with China in effort to reduce Nepal's dependence on its southern neighbor.

• India is ready to adopt a flexible approach in its dealings with Donald Trump's incoming administration, says Foreign Minister Subrahmanyam Jaishankar, acknowledging that US-India relations will require some compromises amid potential unpredictability in global affairs.

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 = 84.71 Indian Rupee