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The Weekly Wrap | When Elephants Fight…

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There is an African proverb that when elephants fight, it is the grass that suffers. And in Indian business, the Tata Group is that elephant. Towering, deliberate, rarely loud, yet powerful enough to shake the corporate jungle with a single move.

For over 150 years, the Tatas have built quietly, from salt to software, steel to satellites. They built empires, rescued failing companies, and carried India’s business reputation abroad. Few others can claim such moral and market muscle.

At the heart of this empire sits Tata Sons, the holding company. Two-thirds of it is owned by Tata Trusts. Whoever controls the Trusts effectively controls Jaguar Land Rover, TCS, Tata Steel, and every other crown jewel.

Until recently, Ratan Tata’s shadow loomed large over this structure. He kept the Trusts steady, the board loyal, and the empire unified. After his passing, Noel Tata stepped in. But some shoes are simply too large to fill.

History offers a warning. A decade ago, Ratan Tata fought a bitter war with his chosen successor, Cyrus Mistry. The boardroom battle spilled into courts and headlines. Tata prevailed, but the scars remain and some of them may be showing now.

The Mistrys still hold about 18% of Tata Sons, making them the largest shareholders outside the Trusts. But their position is trapped. They are deep in debt, unable to sell or pledge their stake because Tata Sons’ articles of association restrict the entry of new shareholders.

Enter the RBI, almost by accident. Its new rules require large unlisted NBFCs to list on stock exchanges, a move meant to boost transparency. But it also catches Tata Sons in the net. For the Mistrys, this is a lifeline; a listing could unlock their shares. For the Tatas, it’s an unwelcome spotlight.

So, Tata Sons has reportedly approached the RBI, asking for an exemption. The regulator, so far, is silent.

Meanwhile, another storm brews inside Tata Trusts. According to reports, a faction led by Mehli Mistry, cousin of the late Cyrus Mistry, recently opposed the reappointment of Vijay Singh, seen as a Ratan Tata loyalist, to the Tata Sons board. The vote itself was unprecedented. For the first time, the Trusts’ house looked divided.

Dalal Street noticed. With a group market value near $180 billion, even whispers matter. Investors are reading every headline, parsing every move. And this time, even New Delhi seems to be watching closely.

Reports suggest the government has nudged the Tatas to restore stability, a rare move that rekindles the debate over state influence in boardrooms. In the last battle, during Cyrus Mistry’s ouster, the Centre stayed officially neutral. But insiders recall how LIC, a major shareholder in several Tata companies, abstained from voting, a move that indirectly favoured the Tata camp.

What was said in Delhi’s corridors this time remains unclear. But one thing is certain, when elephants as large as the Tatas begin to stir, no one can afford to look away.

From Bombay House to North Block, the story isn’t just about one boardroom. It’s about the delicate balance between legacy, power, and the state’s invisible hand.

And as always, when elephants fight — the grass waits, hoping not to get trampled.

 

 

On the Right Track, Almost

 

While the Tata trustees are fighting a boardroom battle, the group’s crowning jewel is fighting market forces and economic uncertainties even as it managed to put up a strong show in its second-quarter earnings.

Tata Consultancy Services, India’s biggest software-services exporter, topped revenue estimates for the July-September quarter and said it expects growth to improve in the second half of the fiscal year.

Quarterly revenue rose 2.4% to Rs 65,799 crore, ($7.4 billion) as sales at its banking, financial services and insurance segment, which contributes a third to its topline, rose 1%. Revenue from the consumer, healthcare and manufacturing verticals slipped 2.9%, 2.2% and 1.1%, respectively. TCS’s total order bookings rose to $10 billion during the second quarter, from $9.4 billion in the first quarter and $8.6 billion in the year-ago period.

The results come as a ray of hope for India’s IT sector. The industry has been dealing with cautious client spending across North America, its largest market, as well as Europe, especially after US President Donald Trump cracked down on the H-1B visa regime and as the US debates a proposed 25% tax on outsourcing.

To ramp up its business, the company also said it would set up a new unit to build AI infrastructure, including a 1 GW data centre in India, and announced the acquisition of US-based ListEngage for $72.8 million.

On the flip side, TCS’s net profit missed analysts’ estimate. Net profit increased 1.4% to Rs 12,075 crore, but was weighed down by Rs 1,135 crore in severance costs.

Significantly, its headcount numbers raised doubts that it was under-reporting the number of staff it was laying off. TCS had announced in July a plan to shed 2% of its workforce, or about 12,200 jobs, during FY26. However, its employee count fell by 19,755 to 593,314 at the end of September from 613,069 three months before even though voluntary attrition fell to 13.3% in Q2 from 13.8% in Q1. That’s a 3.2% drop in headcount in just one quarter—or about 7,500 people more than it planned to fire. 

TCS hasn’t fully explained this decline, so don’t be surprised if there are, well, any surprises in coming months!

 

Matters of the Fisc

 

Let’s turn from boardrooms to the economy and to two numbers that define the government’s fiscal pulse: the fiscal deficit and capital expenditure.

The first shows how stretched the government’s finances are; the second, how hard it’s pushing to keep growth alive.

Start with the deficit.

In the first five months of the fiscal, the gap between what the government earns and what it spends has widened sharply, up more than a third from last year. At Rs 5.98 trillion, the fiscal deficit already accounts for 38% of the full-year target, the highest share since the pandemic year of 2020–21.

That’s not a comforting comparison. Then, the high deficit came from emergency spending. This time, it’s from sluggish revenues.

Expenditure has jumped 13.8%, but revenues have risen only 5.4%. And now, with the GST rate cut kicking in from late September, collections could weaken further. By the government’s own admission, the GST rate cut could have a revenue implication of over Rs 480 billion. 

The government’s task of meeting its FY26 fiscal deficit target of 4.4% of GDP, just got harder.

The spending surge is not all bad news, though. Much of it comes from capital expenditure, which is up more than 40%, driven by roads, defence, and railways.

But even here, the shine fades on closer look. A chunk of that rise comes from what a research report calls “optical growth”, a mix of low base effects and one-off items.

Last year’s early months saw muted spending because the government was under a pre-election restraint.

So this year’s jump looks dramatic in percentage terms, even if the actual increase is modest. Add to that a few big-ticket accounting boosts: the recapitalisation of BSNL, funds for the BharatNet programme, and loans to the Food Corporation of India.

They swell the capital spending headline but do little to build new productive assets. So yes, the numbers look impressive, but part of the story is arithmetic, not ambition.

 

Precious Little Things

 

Ever since Vladimir Putin invaded Ukraine in 2022 and western nations froze Russian central bank reserves, central banks of several countries have been buying gold to guard themselves against any such move by the US or European nations. That trend gained momentum this year after US President Donald Trump’s tariff policies created chaos around the world and injected uncertainty into the world economy.

Since 2022, central banks of India, China, Turkey and several other countries have been buying nearly 1,000 tons of the yellow metal every year. That’s double the amount from previous years. This has helped drive a sharp rally in gold prices, which jumped nearly 30% last year and have surged another 52% so far this year.

In fact, spot gold prices rose to a new record above $4,000 per ounce this week. That translates to about Rs 1,25,000 per 10 grams in India! The surge seems even more spectacular when we consider that the stock market benchmarks have risen barely 5-6% this year and are flat when compared with year-earlier levels.

Gold isn’t the only precious metal that is shining, however. Silver prices have surged about 70% year to date and climb a new peak above $51 per ounce this week while platinum has soared 80% to touch a 13-year high.

What’s driving this rally in precious metals? Well, gold has been rising partly because of heavy buying by central banks, which are also dumping US Treasuries due to the uncertainties created by Trump’s policies. These uncertainties are also prompting investors to bet heavily on gold as a safe haven, with inflows into gold funds and ETFs soaring both in India and abroad.

This safe-haven buying is also responsible for the renewed interest in silver. But unlike the yellow metal, the white metal is also benefitting from strong demand from industries such as solar energy, automotive and electronics. A supply deficit has further pushed prices higher.

Robust industrial demand and supply shortages have also propelled platinum, which is used in catalytic converters in car engines as well as in chemical and medical fields. Palladium and rhodium, which are both platinum group metals and are used in catalytic converters, are also up nearly 60% this year, outpacing gold.

What does this price surge mean for ordinary investors like us? Well, if you did catch the trend early on, say last year or even earlier, enjoy the ride. But if you are suffering from FOMO, avoid jumping into the bandwagon blindfolded. As we always say, do your diligence, decide your asset allocation, adjust if needed, and only then invest your hard-earned money into any stock or bond or fund or metal.

 

Market Wrap

 

India’s stock markets had their best week in over three months, with benchmark indices surging mainly on gains in technology and financial stocks. Both the Nifty 50 and the BSE Sensex rose about 1.6% each.

Among sectoral indices, banks and IT led the rally. The Nifty Midcap index climbed 2.1%, while the Smallcap index gained 1.4%. The RBI’s announcement last week easing lending norms buoyed financials, while a thaw in Indo-US trade talks lifted technology shares.

According to reports, foreign investors were net buyers till Thursday, though they remain net sellers on a year-to-date basis.

Max Healthcare, Infosys, Eterna, HCL Technologies, and Kotak Mahindra Bank were among the top gainers, each rising over 5% during the week.

On the downside, HDFC Life, Adani Enterprises, Coal India, and ITC were among the few stocks to end in the red, declining about 1%.

 

 

Other Headlines

 

That’s all for this week. Until next week, happy investing!

 

Interested in how we think about the markets?

Read more: Zen And The Art Of Investing

 

Watch here: Investing in International Markets

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