Oct 22: Mutual Funds Turn Red, The Great Snack Wars

Prada’s Kolhapuri knock-offs are officially old news. The internet's latest fashion accessory is a Vimal Paan Masala handbag, strutting through Indian streets like it just dropped at Paris Fashion Week. For those who swear by “Bolo Zubaan Kesari,” this is the ultimate status symbol. While Indian internet has already crowned the global creators rocking the bag as “eligible for citizenship,” we’re just eagerly awaiting the next drop from our very own House of Vimal.

Now, let’s get into the Dispatch! 🚀

Today’s reading time is 6 mins.

From SIP To “Sit Tight”: India’s mutual fund industry is facing its toughest stretch in seven years. For the first time since 2018, one-year rolling returns across most equity mutual fund schemes have turned negative. Elara Capital data shows that aggressive equity deployment and concentrated inflows have not offset a broad-based slowdown. The reversal began around August 2025, when an AUM‑weighted gauge of equity mutual fund performance slipped below zero. Since February, equity funds have underperformed debt on a one‑year basis, with the “equity premium” narrowing to about 10%—the smallest gap since October 2020.

Investor Caution Evident: Pure equity inflows fell from ₹42,700 crore in July to ₹30,400 crore in September. Small-cap funds—recent retail favorites—saw some of the steepest pullbacks, while thematic and sectoral strategies struggled to attract money.  Notably, fresh allocations are skewing toward New Fund Offerings (NFOs) rather than existing schemes, signalling opportunism over conviction.

Weakness Is Broad-Based: The share of schemes posting positive one‑year returns is at its lowest since the COVID‑19 sell‑off of 2020, and median returns across large-, mid-, and small-cap funds have slipped in the red. Fund managers have trimmed cash from 6.8% in April to 5.4% in September, indicating a push to stay invested despite deteriorating performance. Meanwhile, inflows are increasingly concentrated: about 25% of mutual fund investments this year went into just six stocks, and half into only 19. The crowding raises red flags about sector‑specific vulnerability if volatility persists.

The Crunch of the Nation: India’s snacks market has become a fiercely competitive arena this Diwali, valued at ₹46,571 crore. And the crunch is only set to grow—the sector is projected to more than double to ₹1,01,811 crore by 2033, expanding at a robust 8.6% annual rate, according to IMARC.

Giants Rule The Shelf: At the heart of this boom are the old titans—Haldiram’s, Balaji Wafers, and Bikaji—who have built empires on trust, affordability, and deep distribution. Haldiram’s now commands about 13% of the savoury snacks market and is valued at nearly $10 billion after Temasek’s recent investment. Balaji posted profits of ₹578.8 crore in FY24, while Bikaji continues expanding aggressively, targeting 3.5 lakh retail outlets. For decades, ₹5 and ₹10 packs defined the industry. Today, a younger, health-conscious generation is rewriting the rules of snacking.

Meet The Disruptors: Enter Farmley, TagZ, Bonvie, and Too Yumm!—brands selling “clean,” “mindful,” and “modern” indulgence. Healthy snacking is growing 1.2 times faster than traditional options, with 55% of Indians preferring preservative-free choices and 52% prioritising eco-conscious packaging. But the old guard isn’t fading. Regional giants like Balaji and Bikaji have leveraged local identity and taste loyalty to stay relevant. The informal sector continues to dominate rural markets where trust and price trump packaging. Even so, the category transformation has caught global attention. With Diwali lighting up competition, traditional brands are rolling out festive namkeen boxes, while startups push well-designed dry-fruit assortments through Blinkit and Swiggy Instamart.

India’s Smartphone Market Grows 3%: India’s smartphone market showed modest growth in the September quarter, reflecting steady demand despite economic headwinds. Premium devices led the recovery, with Apple posting its strongest quarter ever in the country. Analysts expect festive season sales to further boost volumes in the coming months.

Reliance Secures Middle East Oil: Reliance Industries has moved to secure crude supplies from the Middle East amid increased scrutiny of Russian oil imports. The shift aims to reduce geopolitical and regulatory risks while ensuring uninterrupted refining operations. Middle Eastern contracts are expected to offer stability in both pricing and delivery. This strategy strengthens India’s energy security and provides flexibility in sourcing during uncertain global conditions.

Tech Startups Cut 4,000 Jobs: Indian tech startups have cut more than 4,000 jobs this year as funding tightens and costs are rationalized. Edtech, fintech, and SaaS startups were the most affected. Companies are recalibrating operations to improve sustainability amid market corrections, mirroring global layoff trends led by the USA.

Diwali Retail Hits ₹6.05 Lakh Crore: Retail sales during Diwali hit a record ₹6.05 lakh crore, underscoring robust consumer demand. Electronics, apparel, and household goods led purchases, with both urban and rural markets contributing. Festive promotions and easier digital access supported the surge, which economists view as constructive for year‑end momentum.

Core Sector Growth Slows To 3%: India’s eight core sectors recorded the slowest growth in three months, expanding just 3% in September. Steel, cement, and electricity sectors showed particularly muted performance, signaling softening industrial activity. Analysts attribute the slowdown to subdued domestic demand and global uncertainties. The pace of growth is expected to recover gradually if government infrastructure spending and private investments pick up.

FPI Outflows Hit, FDI Drops: Foreign portfolio investors sold aggressively in August, while net foreign direct investment turned negative for the first time in four years. Equity outflows reflected risk-off sentiment amid global market volatility. Overall FDI inflows fell to $6.0 billion, a sharp drop from last year’s peak. Analysts suggest continued monitoring of policy and macro trends to stabilize investment flows.