After years of stockpiling cash, India Inc. has finally started to loosen the purse strings. But not in the way many hoped. Instead of funding fresh factories or big expansion plans, companies are using their cash for dividends and acquisitions.
A Mint analysis of Centre for Monitoring Indian Economy data shows corporate cash accumulation slowing to an eight-year low by September. Cash balances rose just 1% year-on-year, a sharp contrast to the pandemic years when uncertainty drove annual growth of nearly 15%. Yes, cash piles are still sizable, but they remain well below global peers, according to Morgan Stanley.
So whereâs the money going? Shareholders, first. Dividends touched a decade-high in FY25. Deal-making, next. M&A activity is picking up, especially targeted overseas buys that promise technology and talent, not new capacity.
Whatâs missing are the old âanimal spiritsâ. With capacity utilization stuck at around 73% and demand signals mixed, companies see little reason to build anew. The question for FY26 is whether confidence will returnâor will cash stay cautious? Read the full story by Abhinaba Saha.
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Market Watch
Indian equities ended lower on Friday, as investors stayed in sell mode amid sluggish volumes and no fresh triggers. The Sensex fell 367 points to 85,041, while the Nifty slipped 100 points to 26,042, with mid- and small-caps also easing. Market capitalization dipped about âš1 trillion in a single session. Still, on a weekly basis, both benchmarks snapped their losing streaks, edging modestly higher ahead of the Q3 earnings season.
Click here to understand the key factors that moved the market today.
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Really sharp analysis on the cash deployment puzzle. The fact that corporatse are choosing shareholder returns over greenfield capex even with sizable cash reserves tells us more about demand confidence than any forward guidance could. When I lookd at similar patterns in other emerging markets, the 73% capacity utilization threshold seems to be the critical point where animal spirits either return or cash hoarding begins again.