SCO Summit 2025: Marking a shift in relations with China, Prime Minister Narendra Modi attended the Shanghai Cooperation Organisation (SCO) summit, his first visit to the country in seven years.
There Modi also held talks with Chinese President Xi Jinping on the sidelines of the summit. The two leaders vowed to expand trade and investment ties to stabilise global commerce, and agreed to deepen bilateral ties to combat pressing challenges. This comes against the backdrop of high tariffs that Asia’s two largest economies face from the US.
The two leaders also agreed to work towards a “fair” solution to the festering border issue.
Modi also held bilateral talks with Russia’s Vladimir Putin, with the Prime Minister saying that India and Russia stood side by side even in difficult times.
After falling for three straight sessions, the Indian stock market welcomed September with strong gains. Buoyed by upbeat India Q1 GDP print, GST rationalisation hopes, and a turn in India-China relations, the benchmark indices Sensex and Nifty gained 0.7% and 0.8%, respectively.
“Indian markets stayed strong today with Nifty 50 crossing 24,600, supported by robust GDP data that lifted overall sentiment. Optimism also came from PM Modi’s participation at the SCO Summit in Tianjin, where meetings with Xi Jinping and Putin signalled easing India-China tensions, boosting confidence among investors,” said Pranay Aggarwal, Director and CEO of Stoxkart.
Modi-Xi Meet: Impact for Indian stock market
According to market analysts, the new leaf in India-China relations has scope to positively impact the Indian stock market. From sectoral impact to sentiments, here are 5 ways in which the Modi-Xi meeting may prove to be a mood booster for Dalal Street bulls:
1. Hedge against Trump tariff tensions
The 2025 SCO Summit comes at a critical juncture for India’s capital markets, as Donald Trump’s steep 50% tariff package on Indian exports has shaken investor confidence and raised fears of prolonged trade friction with the US.
According to Ajit Mishra, SVP, Research, Religare Broking, the Russia–India–China (RIC) axis is a positive signal as we grapple with the US tariffs issue.
“We have a deep trade deficit with China. If there are developments where China opens its market, at least to some extent, it can help reduce this deficit. The markets like Russia and China are important to focus on. If the US tariffs cause a 15–25% dent, reducing that pressure by strengthening ties with these countries would be critical. So that’s something investors should watch,” Mishra said.
Meanwhile, Gaurav Goel, Founder & Director at Fynocrat Technologies, said that for India, the SCO summit highlights a shift away from depending on concessions from the US and towards exploring regional solutions.
Goel further highlighted that both China and Russia are now opening their economies further to India, helping redirect trade flows and reduce the sting of US tariffs.
2. Reduced uncertainty in India-China relations
India-China relations, which had soured over the years amid border escalations and the latter’s support for Pakistan, underwent a shift this week. This is another factor, according to Mishra, that could bode well for the markets.
“Investors should feel some comfort knowing that this meeting reduces the risk of uncertainty in critical areas that impact the economy. If these talks turn into actual agreements and actions, it would be positive for both countries,” Mishra opined.
3. Boost for EVs and renewable sectors
Rare earths are a big concern because they impact several sectors, especially EVs and renewables. An official in New Delhi told reporters earlier in August that China had assured India of supplies of fertiliser, rare earth and tunnel boring machines.
Tata Motors, which has traditionally relied heavily on rare-earth magnets sourced from China for its EV manufacturing, closed 3% higher in trade today.
Other renewable energy stocks like Suzlon Energy and Waaree Renewables also closed higher.
4. From aviation to tourism – Multiple sectors to gain
Closer coordination between Asia’s largest economies offers India access to Chinese expertise in solar technology, electric mobility, and large-scale infrastructure execution, accelerating renewable capacity growth and reducing costs for green energy adoption, said Harshal Dasani, Business Head at INVasset PMS.
Sectors like shipping and logistics could see tailwinds as this trilateral alliance promotes Eurasian trade routes and reduces Western dominance over supply chains, he added.
Meanwhile, the opening of direct flights between India and China also bodes well for sectors like aviation and tourism.
“For Dalal Street, these developments strengthen India’s long-term competitiveness narrative, adding strategic depth to its growth story amid global geopolitical realignment,” Dasani said.
5. Long-term energy security
India is the world’s third-largest oil consumer and importer, and cheap Russian crude oil has helped keep a check on overall energy import costs.
Consequently, from a mere 1.7% share in total oil imports in 2019-20 (FY20), Russia’s share increased to 35.1% in FY25, and it is now the biggest oil supplier to India, according to a PTI report.
“As one of the world’s largest oil importers, India has historically faced forex pressure from dollar-denominated crude purchases. Now, Russian oil is increasingly being settled in rupees and yuan, reducing dollar dependence and stabilising reserves. This dynamic strengthens macro stability and enhances long-term energy security, a key positive for Dalal Street,” said Dasani.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
