📰RBI Cuts Rates, Saudi-Indian Partnership, LG Electronics Delays IPO

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:

• India’s central bank moved decisively this month to stave off a trade-war–driven slowdown,

• Saudi Arabia and India have agreed to broaden their strategic partnership beyond oil sales,

• and LG Electronics has put its much-anticipated IPO of its Indian unit on ice.

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

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—Shreyas, [email protected]

Market Update.

RBI Cuts Rates.

India’s central bank moved decisively this month to stave off a trade-war–driven slowdown, cutting its key policy rate by 25 basis points to 6 percent and explicitly shifting to an “accommodative” stance. Minutes from the RBI’s April policy meeting reveal that governors and external members alike saw sufficient space to lean into growth support, even as inflation cools toward multi-year lows.

Easing into uncertain times. Governor Malhotra summed up the challenge: India’s robust domestic demand offers some insulation against global shocks, but it is “not immune to the aftershocks and ripple effects” of US-China tariff skirmishes. Deputy Governor M. Rajeshwar Rao echoed the warning, noting that with the US still India’s largest export destination, trade tensions risk spilling over into weaker exports, volatile markets, and subdued investment.

Against that backdrop, the MPC judged that nurturing growth must take priority. With headline inflation at a near-six-year low of 3.34 percent in March, and core prices remaining benign, policymakers concluded they had latitude to pare borrowing costs without jeopardizing price stability.

Notably, two external members—Nagesh Kumar and Ram Singh—pressed for an even more aggressive easing. Kumar voted for the quarter-point cut but argued a 50 basis point reduction would have been “more effective.” Singh went further, calling explicitly for repo-rate cuts to bolster growth. Saugata Bhattacharya, another external member, flagged the pre-emptive need to support growth amid mounting global disruptions, while internal director Rajiv Ranjan pointed out that progress on disinflation now permits a decidedly growth-friendly policy.

Budget implications: The central bank’s dovish tilt arrives just as the government is crafting its 2025–26 budget. Deeper monetary easing could align neatly with fiscal measures, such as infrastructure spending or targeted stimulus, to create a coordinated boost to growth. The key will be ensuring that fiscal prudence remains intact even as the RBI leans in. The materially lower inflation also now gives room to the RBI to pivot in this direction. 

The next question becomes the scale of rate cuts. Whether India pursues a slower route or starts cutting with abandon depends on services and food inflation, plus global turmoil, either subsiding or rising.

Saudi Arabia and India Grow Their Partnership.

At the same time, U.S. Vice President JD Vance is set to embark on a week-long tour that underscores Washington’s renewed focus on forging closer trade ties amid President Trump’s aggressive tariff strategy. According to the White House, Vance will begin his journey in Italy, where he is scheduled to meet with Prime Minister Giorgia Meloni in Rome. His visit comes on the heels of Meloni’s own trip to Washington, designed to secure tariff relief for the European Union. From Rome, Vance will then travel to India, where early next week he is expected to hold discussions with Modi in New Delhi as part of ongoing efforts to finalize trade negotiations within six weeks.

A cultural touch: Accompanying Vance on his trip is his wife, second lady Usha Vance — the first Indian-American to hold the role. Their visit is rich in personal and cultural significance: as the family tours Jaipur and Agra, they will also partake in events at important cultural sites, underscoring the deeper bilateral ties between the United States and India.

Vance’s itinerary reflects the broader US strategy to engage closely with key trading partners amid mounting pressure from the recent tariff shock that has hit major economies worldwide. Trump’s decision to impose high tariffs on numerous trading partners sparked a severe market downturn, prompting him to temporarily scale back those measures to allow time for negotiations. Under the current arrangement, a lower tariff rate of 10 percent applies during the 90-day negotiating window, a temporary measure that both Europe and India are eager to extend or modify through definitive trade deals.

During his European leg, Vance is expected to continue projecting his own ideological stance; just months earlier, at the Munich Security Conference, he criticized European leaders for allegedly compromising on free speech and democratic values amid shifts in global security and economic paradigms. Italian PM Meloni, a center-right leader and an ideological ally of the Trump administration, has emerged as a crucial bridge in these transatlantic negotiations. India has become crucial due to trade negotiations as a war with China continues to mount. Modi, like Meloni, has also been receptive and an ally of the Trump admin.

LG Electronics Delays IPO.

LG Electronics has put its much-anticipated IPO of its Indian unit on ice, citing turbulent market conditions as the primary drag on timing and valuation. Originally eyeing a May launch that could have fetched up to $15 billion in market capitalization, the company is now considering a postponement until equity markets calm. Various financial advisors have told management to stand down pending a more favorable window. 

Market worries: Despite the Nifty 50 climbing nearly 4 percent since President Trump’s tariff announcement on April 2, the index remains over 7 percent below its September highs, dragging intended valuations down to an estimated $10.5–$11.5 billion (₹892.5-977.5 billion). While that is still a huge IPO for the Indian market, the company was looking to go public at a $15 billion (₹1.3 trillion) valuation. What makes management's standing off interesting is that they likely would have made more money through incentive compensation by taking a lower valuation public. 

The company maintains strong financials with LG generating $2.5 billion (₹216 billion) in revenue and $176.5 million (₹15 billion) in net income in FY 2023–24, and its India unit has led the local appliances market for 13 straight years — credentials that once promised one of India’s largest share sales. Their willingness to stay on the sidelines also reflects a more disciplined approach that multinationals have been bringing to India. 

A bigger danger: LG could further dampen momentum and investor confidence in future listings. 2025 fundraising is at $2.3 billion (₹195.5 billion) compared to $21 billion (₹1.8 trillion) by year-end in 2024. The 2025 market, at this pace, will not reach half of that value raised. 

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Gupshup.

Macro

• Franklin Templeton has been long on India as the economy continues defying global volatility. They see both stocks and bonds outperforming peers and global averages since the large domestic market limits drag on the economy. Tariffs have also been deflationary with regard to commodities, making those input costs even cheaper. Investors bought $200 million (₹17 billion) of equities and $104 million (₹8.8 billion) of bonds.  

• Indian economic activity continues its upward climb after April PMIs. Manufacturing is at 58.4, which is strongly expansionary, and services purchasing is at 59.1; the composite index is at 60. Output and employment is growing for both servicers and manufacturers with healthy demand from domestic and all over the globe.  

Equities

• Indian solar makers have great opportunities to export to the US. Tariffs on solar products are rising in China and other peers. The main issue is that India imports raw material from China, making it possible that China restricts India’s growth, even if it causes short-term pain. Chinese companies could also set up manufacturing bases in lower tariffs.  

• Bajaj Housing Finance reports net income that's 54 percent higher y-o-y. This was driven by a 30 percent rise in interest income, which has nearly no costs associated with it, plus loan losses and provisions went down by 14 percent. The company provides competitive house loans and commercial real estate lending as well. 

• IT services firm MindTree reported 2 percent growth in net income, with a 10 percent growth in revenue. Variable costs for the company rose with revenue, making net income growth comparatively slower. In particular, EBIT margins slid to 13.8 percent from 14.7 percent one year ago. The company is reporting a deal flow with AI services in particular. The company provides IT consulting services.  

Alts

• Adani Group is looking for $750 million (₹63.8 billion) in loans to support its airport unit. They want an offshore loan and are in talks with Barclays, First Abu Dhabi, and Standard Chartered. The uses of the funding are capital expenditure and effective refinancing of dollar debt due in September. The loan would likely be a five-year facility. Adani manages 7 airports across India and is constructing a $2 billion (₹170 billion) international hub outside of Mumbai.  

• ​​Permira shuts down Hong Kong and Shanghai in favor of India.The investment firm is winding down its Chinese offices over the next 18 months while moving senior leadership to India.  

Policy

• Modi leaves Saudi Arabia early and gathers ministers after the terrorist attack in Kashmir. Gunmen opened fire on 26 tourists in Kashmir, prompting Modi to return to India immediately and gather all of his top ministers. The US and Pakistan also offered condolences and support; there is currently a search operation underway to find the perpetrators.

• India is looking to cut tariffs on bikes to 0 percent. In particular, the country will cut tariffs on 750cc engines to 0 percent, which makes up a small portion of the 16 million unit economy in India. 

• India's 110 percent car tariffs look ready to go out. The goal with the tariffs was to prop up firms like Tata and Mahindra while forcing companies like Hyundai and Maruti to set up manufacturing in the country. New Delhi will likely cut tariffs on cars over a 10-year period, and current negotiations point to tariffs only coming down on cars priced at $50,000 (₹4.3 million). There will also be stronger guardrails on EVs to protect India’s nascent industry.   

See you Thursday.

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.