Monetary policy, through rates, liquidity, and signalling, usually sets the tone for financial markets more decisively than any other force. So how does this week’s 25-basis-point rate cut by the Federal Reserve fit into “Don’t fight the Fed” adage?
On paper, the decision looked dovish. The Fed not only cut but also signalled the possibility of two further reductions this year. Yet the tone from Chair Jerome Powell was anything but an invitation to celebrate. He framed the move as “risk insurance,” not the start of an easing cycle. That distinction matters. Markets that read the cut as a green light for aggressive risk-taking may find themselves at odds with a central bank still fighting to balance inflation with rising labour market risks.
Inflation remains above the 2% target at about 3%, but labour market cracks are also widening. Revised data show US employers added 911,000 fewer jobs than previously reported in the year through March. August payroll growth was a meagre 22,000, and unemployment has climbed to 4.3%, a four-year high. The Fed has to walk a narrow path—acknowledging weakness without fuelling expectations of unlimited stimulus.
For investors, the message is anything but clear: Don’t fight the Fed is right, but one cannot misread Powell’s caution as capitulation. What are the odds of a rapid easing cycle and liquidity once again flooding markets? Powell has deliberately avoided the word “pivot” and resisted pressure from President Donald Trump, who has demanded steeper cuts. By holding the line at 25 bps, Powell reinforced institutional independence and signalled that the Fed’s dual mandate remains its compass.
For India and other emerging markets, the “don’t fight the Fed” lesson resonates differently. Lower US rates ease pressure on currencies and open space for local central banks to cut without destabilising capital flows. The Reserve Bank of India (RBI), facing benign inflation and slower growth, now has greater room to act. But here too, policy signals matter. If the Fed’s easing proves short-lived, RBI must calibrate carefully to avoid getting caught on the wrong side of global flows.
The bottom line: This cut was not a free lunch. It was a cautious step wrapped in hawkish language. Markets that respect the Fed’s signals, rather than betting against them, will navigate the next phase with fewer bruises.
Just Keep Moving
I don’t think about when it’s going to stop and what you do before it stops. You just keep moving. – Robert Redford
Redford, the Oscar-winning actor-director who rose to stardom in the 1960s and 70s with movies such as ‘Butch Cassidy and the Sundance Kid’ and ‘All the President’s Men’, stopped moving this week. He was 89.
While the Hollywood icon—last seen in the 2018 movie ‘The Old Man and the Gun’—may have never thought about stopping work, most of us do have to think about it and be prepared. For, one day, we all will have to hang up our boots and retire. In fact, that may even happen sooner than anticipated due to technological advancements, macroeconomic conditions, or healthcare challenges.
Why are we talking about retirement today? Well, because India’s pension fund regulator this week proposed several measures that can change how we plan for our retirement and overhaul an industry that manages total assets of Rs 1.5 trillion (about $17.3 billion).
The Pension Fund Regulatory and Development Authority (PFRDA) has outlined a Multiple Scheme Framework that will allow fund houses to create customized products for non-government subscribers to the National Pension System (NPS). Currently, NPS subscribers can opt for only one investment choice per tier. Effectively, in the new system that takes effect from Oct.1, subscribers will be able to hold multiple schemes and align their investments as their retirement or wealth-building goals evolve.
The new framework allows greater flexibility to fund managers. Currently, NPS schemes are spread across four asset classes—equities, corporate debt, government securities, and alternative investment funds. The maximum allocation to equities is 75% currently. But they will now to be allowed to create schemes with up to 100% allocation to equities.
Apart from the new framework, the PFRDA also made a separate set of proposals to overhaul the NPS. These proposals include allowing NPS subscribers to make higher lumpsum withdrawals and systematic withdrawals by redeeming the accumulated units.
For instance, subscribers with a total corpus of up to Rs 12 lakh at the time of exit may be allowed to withdraw half of the accumulated amount. Currently, NPS subscribers can make a lumpsum withdrawal if the accumulated corpus is less than Rs 5 lakh.
Another proposal includes lowering the limit to buy an annuity plan from 40% of the corpus to 20% at the time of exits for non-government subscribers. This condition, which locks in 40% of a person’s wealth, is often cited as one of the biggest reasons that deters non-government subscribers from adopting NPS.
In another key proposal, the PFRDA recommended allowing subscribers who give up Indian citizenship to withdraw the entire corpus without having to buy annuity. It also proposed to extend the age limit for exit from the NPS to 85 years from 75 years currently.
All in all, the proposals and the new framework can go a long way in increasing the popularity of the NPS. So, if you are planning for your retirement, do check out these new measures. And if you aren’t yet planning, well, do so now!
Tapping Gen Z
Moving on to corporate news, the Aditya Birla Group is taking yet another shot at expanding its apparel retail business.
Aditya Birla Fashion and Retail Ltd—the group company that houses Pantaloons, digital-first brands such as WROGN and Bewakoof, and ethnic wear brands such as Sabyasachi and House of Masaba—has now launched an affordable fashion brand called “OWND!”. It plans to open 400 outlets in the next three to five years under the new brand that will mostly sell products priced below Rs 1,200.
Why is the move significant? The new brand will focus on young adults, or the Gen Z, who want trendy yet affordable styles. That pits it directly against Tata Group company Trent’s fast-growing budget apparel chain Zudio.
Zudio, as is well known, has propelled Trent’s spectacular rise. The retailer’s revenue has grown at an annualized pace of 35% in in the last five years. Its shares mirrored that rise, jumping 10 times from 2020 to an all-time high of Rs 8,345.85 in October 2024. And the shares began sliding when Zudio’s engine began to sputter. The Trent stock is now down 38% since the record high.
On the other hand, the Aditya Birla Group’s retail journey has had more misses than hits. The group bought supermarket chain Trinethra in 2007 and renamed it More. A decade later, after failing to compete with the likes of Reliance Retail and DMart, the group sold More to Amazon and private equity firm Samara Capital. Similarly, in 2012, the group bought Pantaloons from Kishore Biyani’s Future Group. It then merged Pantaloons with another group company that owned lifestyle brands like Louis Philippe and Allen Solly to create Aditya Birla Fashion. Last year, it demerged those brands and created Aditya Birla Lifestyle Brands Ltd.
Today, Aditya Birla Fashion and Aditya Birla Lifestyle have a total market capitalization of just about Rs 28,800 crore. Meanwhile, Trent—despite losing more than a third of its value over the past year– a market capitalization of Rs 1,82,880 crore, or more than six times that of the two Birla companies.
So, with OWND!, can the Aditya Birla Group create its own niche? We hope it does. But if its track record is any indication, we are keeping our fingers crossed!
Adani and Ambani
Staying with developments in India Inc, the week gone by turned out to be a picture of contrast for two of India’s leading businessmen. While billionaire Gautam Adani got a clean chit from the capital markets regulator, the former billionaire Anil Ambani found itself deeper into legal troubles.
The Securities and Exchange Board of India dismissed allegations made by US short-seller Hindenburg Research in 2023 that Gautam Adani and some Adani Group companies engaged in stock manipulation and that they didn’t disclose related party transactions.
While the group had denied those allegations, the market value of its companies had plunged by nearly $150 billion following Hindenburg’s accusations. Since then, however, the shares have recovered.
SEBI had started its probe into Adani Ports, Adani Power, Adani Enterprises and certain offshore funds after Hindenburg’s allegations. In its final order on Thursday, SEBI noted that the transactions between Adani companies and companies that Hindenburg flagged couldn’t be called related-party transactions and so didn’t violate any regulatory norms.
Meanwhile, The Central Bureau of Investigation (CBI) has filed chargesheets in cases connected to “fraudulent” transactions between Anil Ambani’s companies, YES Bank and companies owned by former YES Bank CEO Rana Kapoor.
The CBI said that YES Bank invested Rs 5,000 crore in two Ambani-controlled companies in 2017, with Kapoor’s approval, despite credit rating firms flagging financial risks. The funds were later siphoned off, the CBI alleged.
The CBI also said that Kapoor “abused” his position to channel YES Bank’s funds into Anil Ambani group companies. Those Ambani companies, in turn, extended concessional loans to companies linked to Kapoor’s family, the CBI said. It added that this led to a loss of Rs 2,797 crore to the bank and helped Ambani’s firms and the companies linked to Kapoor’s family make unlawful gains.
Market Wrap
India’s stock markets clocked gains for a third consecutive week, driven by GST rate cuts and optimism over trade talks with the US. A rate cut by the US Fed also boosted sentiment on expectations it would increase foreign fund inflows into emerging markets such as India.
Both the Nifty 50 and the BSE Sensex climbed 0.9% for the week. The small-caps jumped 2.9% while the midcaps rose 1.5%. As many as 14 of the 16 major sectors gained for the week.
Adani Enterprises was the top gainer this week, rising 6% after the Securities and Exchange Board of India dismissed allegations against the group by US-based Hindenburg Research. Adani Ports rose, too.
Banking stocks were mixed, with State Bank of India, Axis Bank and Kotak Mahindra Bank rising but HDFC Bank and ICICI Bank ending lower. Auto stocks were mixed, too. Top carmaker Maruti Suzuki and bikemakers Hero MotoCorp and Eicher revved up but Bajaj Auto and Tata Motors skid.
IT stocks scored modest gains, led by Tech Mahindra and Wipro. Zomato parent Eternal, Bharti Airtel, Sun Pharma and Grasim were among the other major winners.
Titan was the top loser, followed by Asian Paints and Hindalco. FMCG companies Nestle India, ITC, Hindustan Unilever and retailer Trent also lost ground, as did non-bank lenders Bajaj Finance, Bajaj Finserv and Shriram Finance.
Other Headlines
- SEBI approves IPO proposals of Pine Labs, Hero Motors, Canara Robeco Asset Management
- Urban Company ends with 62% gain on stock exchange debut, market cap hits $3 billion
- Stock broking firm Groww files updated DRHP for IPO, to raise Rs 1,060 crore in fresh issue
- Sumitomo Mitsui Banking Corp to buy another 4.2% stake in YES Bank for Rs 2,850 crore
- CBI files charges against Anil Ambani, former Yes Bank CEO Rana Kapoor in alleged loan fraud
- Apollo Tyres becomes new lead sponsor of Indian cricket team after Dream11 pulls out
- Jindal Steel International makes non-binding bid for German firm Thyssenkrupp’s steel unit
- Competition Commission of India clears JSW Paints’ bid to buy 75% stake in Akzo Nobel India
- India’s net direct tax collections rise over 9% year on year to Rs 10.8 trillion in April-September
- India’s merchandise trade deficit narrows in August to $26.49 billion from $27.35 billion in July
- China’s SAIC to cut stake in India car venture with JSW amid investment curbs, reports Reuters
- Indian government says trade discussions with US ‘positive’ and ‘forward looking’
That’s all for this week. Until next week, happy investing!
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