In the mid-1990s, a few years after India opened its economy, several American fast-food chains entered the country. McDonald’s, KFC, Pizza Hut, and Domino’s began to sell burgers and pizzas to a people who wanted to try something other than samosas and aloo-tikkis. All of them formed partnerships with local business families.
McDonald’s Corp tied up with Amit Jatia’s Westlife Foodworld; KFC and Pizza Hut owner Yum Brands! teamed up with Ravi Jaipuria’s Devyani International; and Domino’s Pizza Inc joined hands with the Bhartia family’s Jubilant Foodworks. All three partnerships grew steadily and eventually listed on stock exchanges. And barring one hiccup—McDonald’s tie-up with Vikram Bakshi that fell apart—the three partnerships have stood the test of time for three decades.
And then, a little more than a decade ago, a second such wave swept India. Yum Brands formed a second partnership in India and Restaurant Brands International Inc., the Canadian-American company behind Burger King, Tim Hortons and Popeyes, made its entry. Only this time, there was a difference.
The difference was that, instead of teaming up with business families, Yum Brands and Restaurant Brands joined hands with private equity firms. Sapphire Foods India Ltd, Yum’s second master franchisee in India, was backed by PE firms Samara Capital, CX Partners, Creador, NewQuest Capital, TR Capital, and the PE arms of Goldman Sachs and Edelweiss, while Everstone Capital formed Burger King India Ltd, now known as Restaurant Brands Asia Ltd.
These two ventures also grew steadily and went public four-five years ago. But this month, both those decade-old ventures decided to fold into companies run by, well, Indian business families. Sapphire is merging into Devyani while Restaurant Brands Asia is being acquired by Ajanta Pharma co-founder Madhusudan Agrawal’s Inspira Global, which owns Chinese Wok and The Momo Co brands.
But what explains the two acquisitions within a span of barely 20 days? Well, there are several reasons. In the Sapphire-Devyani case, for instance, both companies had begun overlapping as they expanded across the country. And combining the two makes sense to cut costs, improve efficiency, and boost sales and profits.
There is another reason. Business families can stay in business indefinitely but PE firms have a definite investment lifecycle that usually lasts between five and ten years. So, they must exit their portfolio companies and return money to their investors. And that’s what happened in both cases.
There are other factors, too. Consumption has been weak for the past couple of years. Rents are rising, wages are stagnant and unemployment is high. Changing customer preferences such as growing home delivery services, especially during and after the Covid-19 pandemic, have made matters worse for restaurant chains.
This reflects in the companies’ financial and stock market performance. All five companies—Westlife, Jubilant, Devyani, Sapphire and Restaurant Brands—are currently trading 28-47% below their one-year highs.
Restaurant Brands, whose shares had more than tripled in the first month of its listing in December 2020, is now back to its IPO levels. In comparison, the small-cap index is down only around 14% while the benchmark large and mid-cap indices have slipped only about 5-6% from their 52-week highs.
So, where do these companies go from here? Well, nothing changes for Westlife and Jubilant, at least for now. Devyani and Restaurant Brands will, hopefully, emerge stronger. And that will be good news for their foreign partners.
When Indices Start to Matter
If you invest through mutual funds, there is a good chance more of your money is now tied to an index than you realise. Over the past decade, passive funds have moved from the fringes of India’s mutual fund industry to the mainstream. Index funds, ETFs and gold-linked passive products now account for close to one-fifth of total mutual fund assets.
When a growing share of household savings is tied to rules-based indices, the way those indices are created, managed and changed starts to matter much more. This is the backdrop to a new move by the Securities and Exchange Board of India that is worth understanding. On January 19, SEBI released a draft circular under its Index Providers Regulations, inviting public comments until February 10. At the heart of it is a new concept: “significant indices”.
The core of the SEBI proposal is straightforward. An index becomes “significant” if domestic mutual fund schemes tracking or benchmarking it together manage more than Rs 20,000 crore. The threshold is based on a six-month average of assets. This is about scale, not popularity. Once an index influences large pools of retail money, SEBI believes, it should be treated as part of the market’s core infrastructure.
Until now, index providers largely sat at a distance from investors. Mutual funds and asset managers were regulated. But the index itself—which decides which stocks enter or exit and how weights are assigned—operated in the background. SEBI is now trying to bring that layer into clearer regulatory view. If an index is classified as significant, its provider must register with SEBI within six months and make mandatory disclosures regularly.
For investors, SEBI has clarified that its grievance redressal mechanism will apply to significant indices. This means that if you invest in a mutual fund scheme tracking such an index, and there is an issue at the index level, there will be a defined route to manage complaints. Earlier, investors could find themselves caught between a fund house pointing to index methodology and an index provider saying it does not deal with retail investors.
The timing reflects how quickly passive investing has grown. Passive funds appeal because they are low-cost and simple, at a time when fund choices have multiplied. Large-cap index funds, broad-market ETFs and gold-linked passives have attracted steady inflows, particularly during periods of market volatility. As this segment grows, index decisions carry more weight. A change in methodology or rebalancing rules can move large sums of household savings at once.
This regulatory move is unfolding alongside another conversation that matters to investors. Ahead of the Union Budget, the Association of Mutual Funds of India has asked the government for tax and policy changes aimed at encouraging long-term investing. Among its proposals are the restoration of indexation benefits for long-term debt mutual funds, tax parity for equity fund-of-funds, and incentives that reward investors for holding equity funds over longer periods.
To be sure, this doesn’t change how your funds are created or taxed. It does not affect returns or require any action from investors now. Even if SEBI’s proposals are finalised, their impact will be gradual and structural rather than immediate.
What it does signal is how India’s mutual fund ecosystem is evolving. Passive products are no longer peripheral, indices are beginning to be treated as market infrastructure, and policymakers are paying closer attention to both the incentives that shape investor behaviour and the safeguards that underpin trust.
Growth Momentum
Moving on from the mutual fund ecosystem to a broader topic: how is the Indian economy doing right now?
According to the latest State of the Economy report from the Reserve Bank of India, the answer, at least for the moment, is better than expected.
The central bank said a broad set of high-frequency indicators continues to point to sustained growth momentum. These are data points collected frequently – such as GST collections and e-way bill generation – that offer a near-real-time view of economic activity and tend to move ahead of headline GDP numbers.
What stands out in the RBI’s assessment is the breadth of demand. Rural consumption is showing signs of revival while urban demand is recovering gradually. Together, they are supporting activity across sectors. Manufacturing has rebounded and services remain buoyant. Retail automobile sales recorded broad-based growth, helped by GST cuts.
Momentum carried through December. Economic activity remained firm, with healthy expansion in e-way bill generation. The RBI attributed this to a combination of GST rate rationalisation, stock clearance and companies pushing to meet year-end sales targets. Growth in GST revenue collections was driven largely by higher import-related GST receipts, the report added. Taken together, these indicators suggest that growth is being supported not by a single driver, but by a mix of consumption recovery, manufacturing strength and steady services demand.
On its baseline projections, the RBI expects GDP growth of 7.3% in the financial year ending March 31, 2026. For the following year, growth is projected at 6.7% and 6.8% in the first and second quarters, respectively – levels that would keep India among the fastest-growing major economies. That assessment has found support elsewhere. Earlier this week, the International Monetary Fund raised its growth forecast for India in 2025-26 by 0.7 percentage points to 7.3%.
Globally, the IMF expects growth to remain steady, though risks remain amid trade tensions and geopolitical uncertainty. For India, inflation is projected to move back close to target after a sharp decline in 2025. Taken together, the message is one of near-term resilience alongside an acknowledgement that medium-term risks have not disappeared.
Relief Rally
If recent Indian data points to an economy holding up better than feared, global markets this week offered a reminder of how quickly sentiments can swing on political signals.
Global equities rebounded sharply on Wednesday after US President Donald Trump said a framework had been reached on a future arrangement involving Greenland and, crucially for markets, backed away from imminent tariffs. Speaking at the World Economic Forum in Davos, Trump said tariffs that had been scheduled to take effect from February 1 would no longer be imposed. He also ruled out taking Greenland by force.
Those remarks helped calm markets that had been unsettled by days of uncertainty over US-Europe relations and the broader stability of the transatlantic alliance. Global markets responded swiftly. The S&P 500 rose about 1.2%, its biggest one-day gain since late November. The Dow Jones Industrial Average and the Nasdaq Composite posted similar gains. The VIX index, often seen as a measure of market anxiety, fell more than 15%, reversing much of the previous day’s spike.
What markets appeared to be pricing was not clarity on outcomes, but a narrowing of immediate risks. Trump did not provide details of the Greenland framework, which he said had been discussed with NATO Secretary-General Mark Rutte. European officials were cautious, noting that substantive terms remain to be worked out and that discussions with Denmark and Greenland would continue. But for investors, the shift in tone mattered. By shelving tariffs and signalling negotiation over confrontation, the episode moved Greenland from a source of shock to one of ongoing diplomacy.
European equities were more subdued, with the STOXX 600 roughly flat, reflecting lingering political unease. Still, the broader rebound underlined a familiar pattern: geopolitical surprises can unsettle sentiment abruptly, but even partial reductions in uncertainty can trigger rapid reversals.
Market Wrap
Indian stock markets fell sharply this week, dragged down by foreign outflows and a mixed earnings season.
The Nifty 50 fell 2.5% to mark its biggest weekly drop in four months, while the Sensex slipped 2.4%. The small-cap index plunged 5.8% and the mid-cap index slumped 4.6%. All 16 major sectoral indices declined during the week.
Foreign portfolio investors have sold Indian shares worth Rs 33,600 crore, or $3.7 billion, so far in January. This is the highest since August last year when they sold shares worth $3.9 billion.
Zomato and Blinkit parent Eternal was the top loser, dropping 13.5% after concerns over its profits and as it said founder Deepinder Goyal will step down as CEO.
Adani Enterprises sank 13.4% and Adani Ports cracked 8.5% after the US Securities and Exchange Commission asked a court for permission to bypass the Indian government and directly email summons to founder Gautam Adani and group executive Sagar Adani in an alleged bribery scheme.
Heavyweight Reliance Industries fell 4.9% after missing third-quarter profit estimates while its Jio Financial unit lost almost 12%. Drugmaker Cipla and IT firm Wipro fell over 8% each on tepid earnings while ICICI Bank lost nearly 5% after missing profit expectations due to higher provisions.
Apollo Hospitals, Eicher, Titan, Trent, Maruti Suzuki, Max Healthcare, Sun Pharma and HDFC Life Insurance each fell over 4%.
Only nine of the 50 Nifty stocks ended in the green. Tech Mahindra and Infosys were the top gainers thanks to strong revenue growth. Dr Reddy’s Labs, Hindustan Unilever and HCL Tech were among the other gainers.
Earnings Snapshot
- IndiGo Q3 profit plunges 75% to Rs 613 crore, revenue rises 6%
- Adani Total Gas Q3 consolidated net profit rises 11.4% to Rs 159 crore
- LTIMindtree reports 8.3% fall in profit to Rs 971 crore
- Mphasis Q3 profit rises 3.3% to Rs 442 crore, missing analysts’ estimate
- Tata Communications profit jumps 54.3% to Rs 365 crore
- Hindustan Petroleum’s standalone net profit jumps 34.7% to Rs 4,072 crore
- United Spirits posts 12% gain in Q3 profit to Rs 529 crore
- Shoppers Stop posts 69% drop in Q3 profit to Rs 16.12 crore
- Zee Entertainment Enterprises reports 5.5% fall in profit to Rs 155 crore
- Hindustan Zinc profit climbs 46.2% to Rs 3,916 crore on high silver and zinc prices
- Zomato parent Eternal’s Q3 profit soars to Rs 102 crore from Rs 65 crore in Q2
Other Headlines
- US SEC seeks to bypass Indian government to serve summons to Gautam Adani in bribery case
- Sun Pharma gets regulatory nod to sell generic version of weight-loss drug Wegovy in India
- Dr Reddy’s Labs gets regulatory nod to sell generic version of diabetes drug Ozempic in India
- Serum Institute CEO Adar Poonawalla to bid for IPL team Royal Challengers Bengaluru
- PhonePe files updated draft prospectus for IPO; Walmart, Tiger Global, Microsoft to sell shares
- Zomato founder Deepinder Goyal steps down as CEO; Blinkit’s Albinder Dhindsa to take over
- L’Oréal to invest Rs 3,500 crore to set up beauty tech hub in Hyderabad
- GIFT City regulator proposes measures to manage algorithmic trading on local bourses
- India’s infrastructure output accelerates to four-month high of 3.7% in December
- Lodha Developers to invest Rs 1 trillion ($11 billion) in 2.5 GW data centre park in Maharashtra
That’s all for this week. Until next week, happy investing!
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