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The bears continued their dominance on the Dalal Street, with Nifty index extending the fall for the fifth consecutive session on December 20, falling below 200-DMA level of 23,826 amid selling across the sectors and weak global cues.

Amid mixed global cues, the index opened flat with negative bias and extended the fall in the first half. However, it failed to hold the mid-session recovery and witnessed extended profit booking as the day progressed to fall below 23,550, before closing at 23,587.50, down 364.2 points or 1.52 percent.

For the week, the index declined 4.76 percent.

Biggest Nifty losers included Trent, Tech Mahindra, M&M, IndusInd Bank, Axis Bank, while gainers are Dr Reddy’s Labs, Nestle India, HDFC Life, ICICI Bank.

All the sectoral indices ended in the red with Nifty realty index shed 4 percent, auto, IT, energy, metal, PSU bank down 2 percent each.

The Nifty midcap 100 index shed nearly 3 percent and smallcap index declined over 2 percent.

“Markets experienced a sharp decline on Friday, shedding nearly one and a half percent as the corrective phase persisted. After a choppy start, the Nifty index steadily weakened throughout the day, breaching the critical support of its long-term moving average, the 200 DEMA. Selling pressure was evident across sectors, with realty, IT, and auto taking the hardest hits. Broader indices were also significantly impacted, registering losses between 2.2% and 3%,” said Ajit Mishra – SVP, Research, Religare Broking.

“As anticipated, declines in IT and banking heavyweights are adding to the market pressure, signaling potential challenges ahead. The November low around the 23,250 zone now emerges as the next key support, while the 23,850-24,000 range serves as a resistance zone for any recovery attempts. Traders should adjust their positions accordingly, maintaining a strong focus on risk management,” he added.

After the weak start, the Bank Nifty index managed to recover but failed to cling onto gains and ended at 50,759.20, down 1.58 percent. The index fell more than 1,000 points from the day’s high of 51,629.

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Shares of KPI Green Energy rallied up to 4.80 per cent at Rs 800 per share on the BSE in Friday’s early morning deals. KPI Green Energy share price surged after the company announced January 3, 2024 as the record date for its proposed bonus issue in a 1:2 ratio. 

“The Company has fixed Friday, January 03, 2025, as the ‘Record Date’ for determining the eligibility of Shareholders entitled for issuance of Bonus Equity Shares of the Company in the proportion of 1 (One) Equity Shares of Rs. 5/- (Rupees Five only) each for every 2 (Two) existing Equity Share of Rs. 5/- (Rupees Five only) each,” the company said in an exchange filing on Thursday.

Further, in a separate announcement, the company said that it has signed an MoU with the Rajasthan government to develop hybrid solar and wind power projects in Jaisalmer.  

“We are pleased to announce that KPI Green Energy Limited (‘Company’) has signed a Memorandum of Understanding (MoU) with the Government of Rajasthan for the development of Hybrid, Solar & Wind Power Projects at Jaisalmer (Ramgarh), Rajasthan,” the company said. 

The Government of Rajasthan would facilitate the company to obtain necessary permissions/clearance etc. from concerned departments of the State as per the existing policies/rules and regulations of the State Government. 

Founded in 2008, KPI Green Energy Ltd, a subsidiary of KP Group, specialises in renewable energy and manages the entire lifecycle of solar and wind-solar hybrid power projects. Operating as an Independent Power Producer (IPP) and a service provider for Captive Power Producers (CPPs) under its ‘Solarism’ brand, the company offers development, construction, ownership, management, and maintenance services for renewable power facilities. 

Financially, KPI Green Energy reported a total revenue of Rs 361.4 crore, marking a 67.4 per cent increase for the quarter ended September 2024 from Rs 215.9 crore in the same quarter the previous year.  

Ebitda rose significantly by 86.6 per cent to Rs 134.4 crore, compared to Rs 72 crore in Q2 FY24, reflecting strong operational efficiency and effective cost management. Profit After Tax (PAT) more than doubled, soaring 101 per cent to Rs 69.8 crore from Rs 34.7 crore in the corresponding period last year.

The company has a total market capitalization of Rs 10,402.39 crore. Its shares are trading at a price to earnings multiple of 66.71 times and at an earning per share of Rs 11.88. 

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Tata Consumer Products has denied a report suggesting American coffee chain Starbucks could exit India soon due to rising losses and high operating costs. In letters to three major Indian stock exchanges, Tata Consumer Products called the report “baseless.”

The coffee chain itself reiterated that it is not exiting the Indian market. “Starbucks is fully committed to the Indian market. Any statements suggesting otherwise are false. TATA Starbucks currently operates more than 470 stores in 76 cities across India, which continues to be a key growth market for Starbucks globally,” Starbucks said.

The “baseless” report

On December 19, a Rajasthan-based media organisation, called The Philox, published a report suggesting Starbucks could soon leave India. Published with the headline “Starbucks to Exit India Due to High Costs, Bad Taste, and Mounting Losses,” the report speculated that the hugely popular coffeehouse chain could shut shop in India due to price-conscious Indian consumers preferring cheaper local substitutes.

Starbucks had entered India in 2012 through a partnership with Tata Consumer Products. The Philox report did not quote any Tata official and acknowledged that “no official statement has been made” even as it claimed that Starbucks beverages are perceived as “overpriced and shallow” in India.

“Despite its ambitious plans, Starbucks has struggled to turn significant profits in the Indian market,” the report said.

It was published days after Starbucks India confirmed that it would delay the planned launch of new store openings.

Tata Starbucks Private Limited, the joint venture of Tata Consumer Products Limited and American coffee chain Starbucks, saw its losses widen to ₹81 crore and revenue from operations grow 12% in fiscal year 2024, according to TCPL’s annual report released in May this year.

Tata Consumer’s clarification

However, TCPL denied the possibility of exiting India in a letter titled “Clarification on News Article Titled – Starbucks to Exit India Due to High Costs, Bad Taste, and Mounting Losses.”

“The Company would like to state that the information in the said article is Baseless,” Tata Consumer Products said in a letter addressed to the National Stock Exchange of India, Bombay Stock Exchange, and Calcutta Stock Exchange.

“Reports of Starbucks looking to exit India (are) completely false and baseless. Tata’s relationship with Starbucks stands strong with shared values and commitment to India,” the company further told CNBC-TV18.

“Starbucks is fully committed to the Indian market. Any statements suggesting otherwise are false. TATA Starbucks currently operates more than 470 stores in 76 cities across India, which continues to be a key growth market for Starbucks globally,” Starbucks reiterated in a statement.

However, Tata Consumer CEO Sunil D’Souza told Reuters on Monday that it will delay plans for some new Starbucks store openings until as fewer customers are walking into its cafes in India.

Starbucks was a top keyword on Google Search in India on Thursday, drawing significant attention from users across the country. Related keywords that people used on Google include “Starbucks to exit India” and “Starbucks T Nagar”.

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Shares of SpiceJet rallied up to 7.85 per cent at SpiceJet per share on the BSE in Thursday’s intraday deals. SpiceJet share price surged after the company reached an amicable settlement with Genesis, resolving their over $16 million dispute.  

Under the agreement, the commercial aircraft leasing company Genesis will receive $6 million from SpiceJet and  will acquire $4 million in SpiceJet equity at a price of Rs 100 per share, the company said in a statement on Thursday.  

Over the course of time, SpiceJet has reached similar settlements with several lessors, following successful resolutions with companies such as Horizon Aviation, Engine Lease Finance Corporation, Aircastle, Wilmington Trust SP, Shannon Engine Support Limited, and Export Development Canada, among others.  

In September 2024, Carlyle Aviation agreed to convert $30 million of lease arrears into SpiceJet equity at Rs 100 per share, reflecting growing confidence in the airline’s financial and operational recovery.   

“This settlement marks another crucial step in our journey towards financial stability. We are pleased to have resolved this matter amicably with Genesis through constructive negotiations. This agreement, which includes Genesis acquiring an equity stake in SpiceJet, will significantly reduce our financial liabilities and further strengthen our balance sheet,” said Ajay Singh, Chairman and Managing Director, SpiceJet.  

Indian low-cost airline SpiceJet, headquartered in Gurugram, last reported a 20 per cent year-on-year decline in consolidated net profit, which fell to Rs 158.1 crore in the first quarter of FY25. The airline’s total income also decreased by 8.3 per cent year-on-year, reaching Rs 2,077.7 crore in Q1FY25.

Meanwhile, on the equities side, SpiceJet’s stock has underperformed the market, as in the last six months it has surged 12 per cent, while falling 9 per cent in the last one year. In comparison BSE Sensex has risen 2 per cent in the last six months and 10.8 per cent in a year.  

The company has a total market capitalization of Rs 7,692.68 crore. At 11:39 AM; the shares of the company were up 6.97 per cent at Rs 60.20 a piece. By comparison, the BSE Sensex was trading 1.02 per cent lower at 79,364.22 level. 

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For those anticipating a calm end to the year, the US Federal Reserve’s latest monetary policy outlook has delivered a shock by scaling down its projected rate cuts for 2025 from four to just two. Global equities reacted with an across-the-board selloff, and the Dow Jones logged its tenth straight session of loss, the longest losing streak in five decades.

The US Federal Reserve’s decision to cut interest rates while inflation was ‘not clearly decelerating’ was a mistake, Ecognosis Advisory’s CEO Andrew Freris told Moneycontrol, adding that Powell has created ‘confusion and instability’ in the equity markets. Going into 2025, the US Fed might need to wait for inflation to stabilises below 2% before consider to cut rates again, Freris added.

Here is an edited excerpt of his interaction with Moneycontrol.

Are we looking at a prolonged pause before further cuts?

If you examine the Fed’s announcement, it seems they’ve lost the plot. Their decision to opt for only two cuts stems from accelerating inflation, yes inflation has been going up for the last 3 months. This makes it impossible for the Fed to continue slashing rates. The markets reacted accordingly, collapsing after this revelation.

Was the Fed too hasty in its initial 50 basis point rate cut?

Absolutely. Cutting rates while inflation was not clearly decelerating was a mistake. The Fed has an inflation target of 2%, which it hasn’t met. Inflation has remained stubbornly above this threshold. Cutting rates in this scenario only creates confusion and market instability, as we’ve seen with the recent sell-off.

What is your expectation for rate cuts in 2025?

I’m sceptical of a 50 basis point cut in 2025 unless inflation begins to decline significantly. Even then, the Fed might need to wait until inflation stabilises below 2% before cutting rates. Adding to the complexity, the expected tariffs from President Trump will have a one-off inflationary impact, further complicating the inflation outlook.

The tariffs, effectively a tax on imports, will push up prices at stores like Walmart, where many goods are imported from China. While the inflationary impact of tariffs is typically a one-off, markets might overreact, interpreting it as a broader inflationary trend.

Should the Fed consider raising its 2% inflation target?

The Fed could consider revising its inflation target, particularly given the incoming administration’s tariff plans. Tariffs are not inherently inflationary but do have a one-time impact on the Consumer Price Index (CPI). If markets mistake this one-off effect for sustained inflation, it could fuel further instability.

Are US markets vulnerable to more corrections, especially technology stocks?

US markets have had an exceptional year, but the Fed’s stance and Trump’s policies have introduced uncertainty. The tech sector, which has been the primary driver of the rally, is especially vulnerable. With interest rate cuts less likely, tech firms—big beneficiaries of the recent monetary easing—are now facing headwinds.

What does this mean for emerging markets?

The impact on emerging markets varies. China, the largest emerging market, continues to post robust GDP growth despite a weak equity market performance. The US’s policies may not immediately affect China’s domestically driven economy, though Trump’s tariffs could have some impact. However, in my opinion, there is a great degree of misunderstanding how badly the Chinese economy is going to be hit by the tariffs threatened by Trump.

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