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Informist, Thursday, Aug. 14, 2025

By Anjana Therese Antony

MUMBAI – Talks between US President Donald Trump and his Russian counterpart Vladimir Putin Friday will provide cues for equity market investors in India next week. The meeting between the two leaders comes at a time when Trump has been putting pressure on Russia's partners, including India, for importing crude oil and financing the "war machine". All eyes will be on the discussion between the leaders as the US has warned that it will announce more secondary tariffs on India if the talks fail. The equity market is closed on Friday on account of India's Independence Day. 

"I'm not really sure what the outcome will be. On one hand, both leaders are bullheaded with each other and on the other, both have a lot at stake," a lead research analyst at a domestic broking firm said. India, too, has a lot at stake as additional tariffs can be imposed, but the impact will be meagre in the medium-to-long term, as India can explore other markets for exports, the analyst said. Despite the near-term jitters caused by uncertainty around US tariffs and expensive valuations, market participants remain bullish about the domestic market's medium-to-long-term returns due to India's growth prospects and the market's "surprising" resilience amid tariff woes. 

This optimism was also reflected in S&P Global's rating upgrade Thursday, citing the country's economic resilience and sustained fiscal consolidation. The rating agency raised India's long-term unsolicited sovereign credit rating to 'BBB' from 'BBB-'. This is the first rating upgrade of India by a top rating agency in at least five years, analysts said.

The rating upgrade also comes after a series of downgrades on the US long-term issuer and senior unsecured ratings by top agencies, including Moody's this year, Fitch in 2023, and S&P Global in 2011. S&P was the first to cut the US rating to 'AA+', followed by Fitch cutting it from the perfect 'AAA' rating, and then by Moody's to 'Aa1'. 

Economic Affairs Secretary Anuradha Thakur said the government expects other global rating agencies to follow S&P Global's rating action on India. "We do expect that other rating agencies will also take note of the factors which have led to an upgrade by S&P and follow suit," Thakur said. 

Domestic benchmark indices, which were slightly in the red, recovered following the rating upgrade and closed slightly higher. The Nifty 50 and the BSE Sensex ended 0.1% higher each at 24631.30 points and 80597.66 points, respectively. The benchmark indices, which had fallen around 17% to their 10-month lows in April from their record highs hit in September last year, have now recovered most of these losses and are now up around 13% from the lows hit in April, but still 6% lower than the all-time highs. 

While experts remain bullish on the medium-to-long-term growth outlook for the market, they also hint at the possibility of a small correction in the near term. Some of them said a fall in the market is "inevitable", but they said it will not be a significant decline. While returns from the equity market will be way lower this year than 3-4 years ago, experts continue to believe that India remains a preferred bet among most emerging markets. The support from domestic institutional investors has been holding the market from a major fall, while foreign investors have been offloading shares and increasing their short positions in index futures. FIIs currently hold around 90% short positions and 10% long positions in index futures. The recent depreciation in the Indian rupee was also one of the factors that made FIIs pull out their investments from the domestic market. 

The earnings season has not provided any major positive or negative surprises for equity investors in India. However, some analysts said the downgrades were lower than expected, which itself is positive. The sharp decline in global crude oil prices also provides some relief for investors amid the flip-flops in US tariffs. The Brent crude October futures contract declined below the $70-per-barrel mark from $80 per barrel hit in April. At 1613 IST, the Brent crude contract traded on the Intercontinental Exchange was at $65.87 per barrel, up 0.4%.   End

US$1 = INR 87.55

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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