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Dear Reader,

We begin today with news of a mega deal in the financial services sector. Mizuho Financial Group has emerged as the frontrunner to buy a controlling stake in Avendus Capital for over Rs 6,000 crore, reports Hamsini Karthik. The deal, which has been in the works for more than a year, is now in its final stages, with negotiations focusing on the roles of Avendus' promoters and potential non-compete clauses. If successful, the acquisition will offer an exit to private equity giant KKR, which bought the stake in Avendus in 2015.

With India aiming to cut its reliance on chip imports to protect itself from supply disruptions, the government has outlined plans to establish India's first semiconductor full-fledged fabrication facility, with Rs 2,500 crore in fiscal support, reports Aihik Sur. This initiative is expected to attract an additional investment of Rs 5,000 crore and create 100 jobs.

It has been a sombre start to the month for the Indian stock market after the benchmark Nifty index logged its fifth straight month of losses in February, its longest slump in nearly three decades. This has led to a clamour for some government intervention to stem the bleeding. However, government officials said they're adopting a "wait-and-watch" approach, hoping the stock market will recover on its own soon, reports Shweta Punj.?

A curious new trend has emerged on the stock market. The traditional inverse relationship between the Nifty 50 and volatility index (India VIX) has broken down, reports Srushti Vaidya. Normally, when stocks tumble, volatility spikes. However, since February 19, both the Nifty 50 and India VIX have fallen in tandem, leaving analysts scratching their heads for explanations. Meanwhile, PSU stocks, once market darlings, have seen a massive selloff, with their share in market capitalization hitting a 15-month low, reports Ravindra Sonvane. The market capitalization of 103 listed PSUs has plummeted by Rs 24 lakh crore from its all-time high in July, with seven firms declining over 60 percent from their 52-week highs.

The larger economic picture isn't much brighter either. The manufacturing sector continues to stagnate, with its share in the economy remaining the same as it was 18 years ago, writes MC Pro’s Manas Chakravarty. Also, read his piece on how private sector non-financial firms are scaling back their capital expenditure plans, with their share in gross capital formation tumbling to 32.4 percent in 2023-24. This decline casts a shadow on India's prospects for a manufacturing renaissance.

Donald Trump's trade policies have created uncertainty, but India could also benefit from the situation, Robert Lawrence, Professor of International Trade and Investment at Harvard Kennedy School, said in an interview with Shweta Punj. Despite Trump's criticisms of India's trade practices, Lawrence thinks the US president may be willing to make exceptions for India?due to its strategic importance, and that India may find new opportunities to serve as a "connector country".

And finally, amid a challenging funding environment. Indian founders are increasingly willing to dilute their stakes to raise capital, reports Aryaman Gupta. The median stake held by founder groups in unicorn startups fell to just 13 percent in 2024.

Regards,

Nalin Mehta

Managing Editor

Moneycontrol