Why did Coffee Day shares jump 20% after Siddaramaiah’s resignation? Did DK Shivakumar-CCD family connection increase speculation in the market? Is political change the real reason behind this upper circuit? Are investor expectations and rumors affecting stocks?
Bengaluru/Mumbai. The relationship between Indian politics and the stock market has always been a very sensitive one, but the political drama in Karnataka has created a stir on Dalal Street that hardly any investor could have imagined. On Thursday, as soon as Karnataka’s senior leader Siddaramaiah suddenly announced his resignation from the post of Chief Minister, a huge crowd of buyers gathered at the counters of ‘Coffee Day Enterprises’ in the stock market. Within minutes, shares of the parent company of Café Coffee Day (CCD) brand touched the upper circuit of 20% and froze.
A resignation happening in the corridors of politics will directly impact the shares of a famous coffee chain company to such an extent that it surprised everyone. But when the layers of this entire incident were unveiled, behind it a structure of power, a famous family legacy and a marital alliance came to light, which has raised a new hope among the investors.
Preparing to become ‘King’ from kingmaker: DK Shivakumar’s growing stature
After Siddaramaiah steps down from the post of Chief Minister, the name that is leading to take over the reins of power in Karnataka is that of DK Shivakumar, who is called the Deputy Chief Minister and trouble-shooter of the state. After the resignation of Siddaramaiah, it is now considered almost certain that Shivakumar will take charge as the next Chief Minister of Karnataka. As soon as this news spread, market pundits immediately started analyzing Shivakumar’s political clout and his family connections. Actually, DK Shivakumar is not just a powerful politician, but he is also one of the richest and influential political faces of the country. The mere possibility of him becoming the Chief Minister has given a boost to all those business interests which are considered close to him, directly or indirectly.
‘CCD’ and DK Shivkumar: The relationship between father-in-law and son-in-law that changed the course of the market
After all, how did Coffee Day shares hit upper circuit of 20% due to Siddaramaiah’s resignation and possible coronation of DK Shivakumar? The answer to this suspense lies in the deep marital relationship between the two families.
The inside story of family bonding
Amartya Hegde, son of late Coffee Day (CCD) founder VG Siddhartha, is married to none other than DK Shivakumar’s daughter Aishwarya. Thus, DK Shivakumar and the family that owns CCD are closely linked.
Since the tragic demise of VG Siddhartha in 2019, Coffee Day Group has been struggling with huge debts and legal and financial troubles. Although the company has reduced its debt to a great extent by selling assets, investors were always looking for a strong backup.
Investors’ bet: Will the Chief Minister’s chair brighten the fortunes of the brand?
The stock market always runs on future possibilities and speculations. There is a perception among investors that if DK Shivakumar becomes the Chief Minister of Karnataka, Coffee Day Enterprises may indirectly benefit from his supreme political influence. Being the son-in-law of a powerful Chief Minister, Amartya Hegde and his family company is expected to get a new confidence and strength in the financial circles and corporate restructuring.
Due to this suspense and ‘power game’, huge volume of purchases took place in the market and shares became rockets. Now it remains to be seen how much this development, which started from Raj Bhavan in Karnataka, can give new heights to CCD’s business in the coming days.