Indian Stock Market Soars Amid Trade Deal Hopes and Strong Earnings
Indian benchmark stock indices, Sensex and Nifty, experienced a significant rally on Wednesday, November 12, 2025, marking their third consecutive session of healthy buying. The Sensex closed 595 points (0.71%) higher at 84,466.51, while the Nifty 50 settled at 25,875.80, up 180.85 points (0.70%). This upward momentum was largely fueled by growing optimism over a potential India-US trade deal, with media reports suggesting an announcement could be imminent. A successful trade deal is expected to substantially lower US tariffs on Indian imports, currently at 50%, to around 15-16%, providing a major boost to sectors like textiles, gems, and jewelry.
Positive sentiment was further bolstered by favorable Q2 earnings, with IT and auto stocks leading the gains. Asian Paints, Adani Enterprises, Tech Mahindra, and TCS were among the top gainers. Adani Enterprises shares surged following the board's approval for a rights issue aimed at strengthening its financial position and supporting growth in infrastructure and energy transition businesses. Broader markets also performed well, with BSE Midcap and Smallcap indices rising by 0.44% and 0.76% respectively.
Retail Inflation Hits Multi-Year Low, Economic Growth Projections Remain Robust
India's retail inflation, based on the Consumer Price Index (CPI), declined to a multi-year low of 0.25% in October 2025, down from 1.44% in September and 6.21% in October 2024. This significant drop was attributed to the impact of GST rate cuts and subdued prices of vegetables and fruits. Food inflation, in particular, saw a decline to -5.02% year-on-year in October.
Meanwhile, major financial institutions reiterated positive long-term outlooks for the Indian economy. UBS projected India to become the world's third-largest economy by 2028 and the third-largest consumer market by 2026. The report highlighted India's potential for real GDP growth of 6.5% year-on-year between FY28-30, driven by strong domestic demand, policy stability, and manufacturing reforms. The National Institute of Public Finance and Policy (NIPFP) also forecasted India's FY26 GDP growth at 7.4%, citing the positive effects of Goods and Services Tax (GST) rate rationalization and robust investment.
RBI Implements Key Policy Changes and Strengthens Oversight
The Reserve Bank of India (RBI) announced several significant policy measures. The central bank granted self-regulatory organization (SRO) status to the Self-Regulated PSO Association (SRPA) for Payment System Operators (PSOs). This move aims to enhance transparency and operational supervision within India's payments ecosystem, with SRPA acting as the primary contact between RBI and companies like PhonePe, Paytm, and Mastercard.
Additionally, the RBI included municipal debt securities as eligible collateral in repo transactions. This measure is expected to boost liquidity and demand for municipal bonds, thereby supporting local infrastructure funding and potentially lowering borrowing costs for urban local bodies.
The RBI is also actively intervening to shield currency and bond markets from the impact of US tariffs, reportedly selling approximately $20 billion from its reserves to prevent the rupee from sliding and buying around $2 billion in bonds to manage borrowing costs. Amidst these developments, RBI Deputy Governor Shri Swaminathan J emphasized the importance of outcome-based regulation and robust governance in financial institutions, particularly in managing risks within large conglomerates. This comes after the RBI initiated an inspection into a significant "fat-finger error" at Karnataka Bank, focusing on risk management and IT oversight.
Government Boosts Exports and Supports MSMEs
The Union Cabinet approved a Credit Guarantee Scheme for Exporters (CGSE), providing 100% credit guarantee coverage up to ā¹20,000 crore for eligible exporters, including Micro, Small, and Medium Enterprises (MSMEs). This initiative aims to enhance the global competitiveness of Indian exporters, support market diversification, and contribute to achieving the USD 1 trillion export target.
Meanwhile, MSMEs have presented their pre-Budget suggestions to Finance Minister Nirmala Sitharaman, advocating for an enhanced technology upgradation fund for FY27, easier access to credit, and support for exploring export markets.
International Collaborations and Business Ventures
In a significant international business development, Manulife Financial and Mahindra & Mahindra announced a 50:50 life insurance joint venture in India. The companies plan to commit up to $400 million each, with an initial investment of $140 million each in the first five years, targeting rural and semi-urban areas to enhance insurance penetration.
Furthermore, India and Mauritius are set to deepen their cooperation in ocean technologies and the blue economy. Union Science and Technology Minister Dr. Jitendra Singh called for stronger collaboration in areas like fisheries, ocean technologies, and desalination, with India offering its expertise in marine resource management.