Day: June 12, 2025

Paytm parent One97 Communications witnessed a sharp selloff in early trade on Thursday, with its shares tumbling nearly 10% amid speculation around the imposition of Merchant Discount Rate (MDR) on UPI transactions—a rumor that the Finance Ministry later firmly denied.

On the NSE, Paytm stock dropped as much as 10% to ₹864.40, while on the BSE, it touched an intraday low of ₹864.20, down 9.97%. The stock was trading 7.52% lower at ₹888 as of 9:46 AM, significantly underperforming the broader BSE500 index, which was down just 0.19%.

What Triggered the Selloff?

The panic began with media reports speculating that the government may introduce MDR—a fee typically charged to merchants for card-based transactions—on UPI payments. This spooked investors, especially those holding stocks in the digital payments space like Paytm.

However, the Finance Ministry swiftly stepped in to quash these rumors.

“Speculations and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading… The Government remains fully committed to promoting digital payments via UPI,” the Ministry said in an official post on social media.

Why MDR Matters

The Merchant Discount Rate (MDR) is the fee merchants pay for accepting digital payments. While it’s standard for card transactions, the government made MDR zero for RuPay debit cards and BHIM-UPI from January 2020, to promote digital adoption.

To further support the digital payments ecosystem, the government also launched an Incentive Scheme that reimburses stakeholders for UPI person-to-merchant (P2M) transactions under ₹2,000, particularly aiding small merchants.

Investor Nervousness Despite Clarification

Despite the government’s denial, the initial speculation was enough to trigger high-volume selling. Within the first 30 minutes of trade, Paytm saw:

• 83.29 lakh shares traded on the NSE (vs. 2-week average of 41.67 lakh)
• 3.71 lakh shares on the BSE (vs. average of 2.77 lakh)

Clearly, investor nerves were on edge.

UPI Growth Stays Robust

Even as the MDR debate flared, UPI continues to grow at a breakneck pace:

• May 2025: UPI processed 18.68 billion transactions worth ₹25.14 lakh crore
• April 2025: ₹23.95 lakh crore in transactions

This underscores the critical role UPI plays in India’s digital economy—and why government policy clarity is crucial for companies like Paytm.

Bottom Line

Thursday’s stock slump highlights the sensitivity of fintech valuations to regulatory speculation. While the Finance Ministry has reaffirmed its support for zero-MDR UPI payments, the market reaction underscores the need for timely communication and investor confidence in policy direction—especially in a sector as fast-evolving as digital payments.

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Tata Group’s retail arm Trent Ltd has trimmed its equity stakes in its joint ventures with Spanish fashion giant Inditex, which operate Zara and Massimo Dutti stores in India. The move reflects Trent’s continued focus on its homegrown retail powerhouses—Zudio and Westside—as it repositions its portfolio toward long-term growth.

Trent Cuts Stake in Inditex Joint Ventures

Trent has two separate joint ventures with Inditex:

• Inditex Trent Retail India Pvt Ltd (ITRIPL) – operates Zara stores
• Massimo Dutti India Pvt Ltd (MDIPL) – runs the Massimo Dutti brand

According to its FY25 annual report, Trent has:

• Reduced its stake in ITRIPL from 49% to 34.94%, via a buyback offer from the JV itself, effective August 30, 2024
• Cut its stake in MDIPL from 49% to 20%, by selling shares to Grupo Massimo Dutti, Spain, effective March 25, 2025

The move suggests a deliberate scale-back of its involvement in the two premium fashion brands, while retaining minority investments.

“The company views its related commitments as a financial investment,” the report stated, reaffirming that these partnerships are not strategic, particularly due to Inditex’s full control over brand ownership and merchandise supply.

Performance Snapshot: Zara vs. Massimo Dutti

• Zara India (22 stores across 13 cities):
  FY25 revenue rose 2.26% to ₹2,839.5 crore from ₹2,776.67 crore in FY24.
• Massimo Dutti India (3 stores):
  Revenue dipped slightly to ₹101.23 crore, down from ₹101.79 crore last year.

While Zara continues to show steady growth, Massimo Dutti remains a niche player in India’s fashion landscape.

Inditex Tightens Grip in India

Interestingly, Inditex appears to be reinforcing its India presence through fully owned subsidiaries, signaling a strategic shift:

• Bershka, the fast-fashion brand, launched in India under Bershka Retail India Pvt. Ltd, with no local JV partner.
• Zara Home has also been set up under a 100% Inditex-owned entity.

Moreover, Inditex holds call options on Trent’s remaining shares in both JVs, while Trent retains put options to sell its holdings under predefined terms, as disclosed in Inditex’s 2024 annual report.

Trent Doubles Down on Zudio & Westside

While easing back on its Inditex collaborations, Trent is going full throttle on its own brands, particularly Zudio and Westside. Together, they form the cornerstone of the company’s retail growth:

• Zudio: Now has 765 stores, making it one of India’s fastest-growing value fashion chains
• Westside: Continues to perform strongly in the mid-premium segment
• Total Trent Stores (FY25): 1,043, spanning multiple banners
• FY25 Gross Sales: ₹17,624 crore

The company also operates Star-branded hypermarkets in the grocery segment.

Conclusion

Trent’s decision to reduce its stakes in Zara and Massimo Dutti reflects a clear pivot from collaborative global brands to scaling in-house labels. With Zudio’s aggressive expansion and Westside’s steady performance, the Tata-owned retailer is betting big on building a self-owned retail empire—tailored for India, built in India.

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Indian equity benchmarks came under heavy selling pressure on Thursday, June 12, halting a six-day winning streak as investors opted to book profits amid weak global cues and rising geopolitical tensions. Both the SENSEX and NIFTY50 witnessed sharp declines, led by a sell-off in index heavyweights.

By 2:29 PM, the SENSEX was down 909 points at 81,608, while the NIFTY50 had shed 281 points, trading just above the 24,850 mark at 24,862.

What’s Behind Today’s Market Slide?

1. Weak Global Cues and Geopolitical Tensions

Global markets turned risk-averse after reports surfaced of rising tensions between Iran and Israel. The Washington Post reported that the U.S. is on high alert amid concerns that Israel may unilaterally strike Iran’s nuclear facilities. In response, The New York Times noted that Iranian military and government officials have already begun discussing potential countermeasures.

This uncertainty rippled through global equity markets:

• Hong Kong’s Hang Seng fell 1.42%
• Japan’s Nikkei declined 0.68%
• Germany’s DAX dropped 1.43%
• UK’s FTSE 100 slipped 0.1%
• France’s CAC 40 shed 0.82%

U.S. stock futures also hinted at a weaker open, with Dow Futures down 0.5% or 214 points.

2. Crude Oil Spike Hits Sentiment

Escalating tensions in the Middle East sent crude oil prices soaring — bad news for India, which imports a majority of its oil. Rising oil prices are inflationary and could pressure India’s trade balance and fiscal health, souring investor sentiment.

3. Heavyweights Lead the Decline

Major blue-chip stocks dragged the benchmarks lower. Notable names like Larsen & Toubro, HDFC Bank, Reliance Industries, Infosys, ICICI Bank, and Mahindra & Mahindra were among the biggest contributors to the market’s fall, collectively erasing nearly 400 points from the SENSEX.

4. Sector-Wide Selloff

The pain was broad-based:

• NIFTY Realty plunged 2%
• Consumer Durables, Metals, PSU Banks, FMCG, Auto, and Financial Services indices all slipped between 1% and 1.7%
• The NIFTY Midcap 100 and Smallcap 100 fell 1.45% and 1.65%, respectively

5. NIFTY50 Gainers & Losers

Out of the 50 NIFTY constituents, 43 were in the red:

• Tata Motors led the losers, dropping 3.12% to ₹713
• Other laggards included Tata Steel, L&T, Coal India, Titan, Shriram Finance, Jio Financial Services, and Trent, falling between 2% and 2.6%

However, not all was gloom and doom:

• Bajaj Finserv, Apollo Hospitals, ONGC, Asian Paints, and Wipro managed to buck the trend and trade in the green.

Market Breadth Remains Weak

The overall market sentiment remained negative. On the BSE, 2,722 stocks were declining, while only 1,225 advanced, highlighting the broad-based nature of the correction.

Bottom Line:
Today’s steep correction reflects heightened caution among investors amid global uncertainties and profit-taking after a strong rally. Traders should brace for continued volatility as geopolitical developments and oil prices remain key variables in the days ahead.

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