BQuick On May 21: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. The EVM Trust Deficit

Leaders of as many as 22 opposition parties met the Election Commission on Tuesday and demanded verification of voter-verified paper audit trail slips of randomly-selected polling stations before the counting of the votes polled in the just-concluded Lok Sabha election begins on May 23.

• They also demanded that if any discrepancy is found during VVPAT verification, 100 percent counting of the paper slips of VVPATs of all polling stations of that particular Assembly segment should be done and compared with the electronic voting machine results.
• The Bharatiya Janata Party condemned opposition parties for questioning the credibility of electronic voting machines and asked them to accept their defeat with grace if the people vote Prime Minister Narendra Modi to power again.
• The Election Commission asserted that EVMs used in the Lok Sabha polls are “absolutely safe” in strongrooms, dismissing allegations that the voting machines used in the elections were being switched with fresh ones. The commission “emphatically and unambiguously” clarified that all such reports and allegations are “absolutely false and factually incorrect”.

Are concerns surrounding EVMs legitimate? Follow all developments here.

2. Cementing Alliances

Two days before the results of the Lok Sabha elections are declared, political parties are scurrying to secure their alliances. Opposition leaders today met in New Delhi to explore the possibility of a non-BJP coalition that can stake claim to forming the government.

• The opposition meeting was attended by various top leaders including Ahmed Patel, Ashok Gehlot, Ghulam Nabi Azad, Chandrababu Naidu, Sitaram Yechury, Arvind Kejriwal and Kanimozhi among others.
• The BJP too will meet their allies after exit polls predicted a return of the NDA government. Narendra Modi, Amit Shah and other BJP leaders will meet over a dinner that will also be attended by Nitish Kumar, Uddhav Thackeray and Ram Vilas Paswan.

Catch updates from the big political meetings in Delhi here.

3. RBI To Step Up Supervision Capabilities

The central board of the Reserve Bank of India, on Tuesday, decided to strengthen its supervisory capabilities by creating a new cadre of officials who will be trained for supervision of banks and non-bank lenders.

• The decision comes at a time when the banking regulator has been caught off-guard by troubles erupting in systemically-important institutions like the Infrastructure Leasing and Financial Services Group.
• The regulator has also been faulted for being unable to catch a build-up of bad loans across banks and liquidity risks across non-bank lenders.
• In a statement, the RBI said that its board reviewed the present structure of supervision in the context of the growing diversity, complexities and interconnectedness within the Indian financial sector.

At present, the RBI follows a risk-based supervision approach.

4. Nifty Drops After Record Rally; U.S. Stocks Climb

Indian equity benchmarks declined the most in over a week as investors book profit after a record rally just a day ago.

• The S&P BSE Sensex swung from a gain of as much as 0.56 percent to end 0.97 percent or 383 points lower at 38,969.
• The NSE Nifty 50 ended at 11,709, down 1 percent.
• The broader market index represented by the NSE Nifty 500 Index closed 0.96 percent lower.
• The 31-share index and the 50-share gauge had registered record highs of 39,571 and 11,883 respectively during the opening trade today.
• The markets witnessed profit booking during today’s trade after a record run, Joindre Capital Services’ Avinash Gorakshakar told BloombergQuint in an interaction. “Investors are currently trading based on the election sentiments and will start looking at the valuations only after the results.”

Follow the day’s trading action here.

U.S. stocks advanced on Tuesday following a mixed session in Asia as the trade-war driven back-and-forth that has dominated markets this month showed few signs of abating.

• The S&P 500 Index jumped at the start of regular trading after the U.S. decided to grant limited relief for consumers and carriers that do business with Huawei Technologies, a day after the White House’s moves against the Chinese telecom giant battered stocks.
• Semiconductors bounced back from yesterday’s 4 percent sell-off, heading for their first gain in four sessions.
• Consumer stocks turned negative after disappointing results from J.C. Penney Co. and Kohl’s Corp.
• The Bloomberg Dollar Spot Index increased 0.2 percent to the highest in five months.
• Gold fell 0.5 percent to $1,271.49 an ounce, the weakest in almost three weeks.

Get your daily fix of global markets here.

5. Tech Mahindra’s Margin Slips

Tech Mahindra Ltd.’s quarterly profit fell for the January-March period, falling short of analyst expectations.

• Net profit declined 6.6 percent quarter-on-quarter to Rs 1,127 crore.
• Revenue slipped 0.6 percent to Rs 8,892 crore.
• Operating margin contracted 70 basis points to 15.4 percent.

Tech Mahindra faced a slowdown in the enterprise business from deferred and shut down projects.

6. Cheapest Stocks With Earnings Growth Potential

The renewed U.S.-China trade war, a liquidity crunch, a slowdown in consumption and election uncertainty turned Indian stock market volatile.

• While the NSE Nifty 50 index recovered from its recent slump after exit polls predicted a return to power for the Prime Minister Narendra Modi-led government, the surge has made stocks expensive.
• The benchmark is trading at 20.4 times its 12-month forward earnings. That’s higher than the five-year average of 18.4 times.
• Analysts said despite higher valuations of India’s equity market, there are stocks with good earnings growth expectations that are still cheap.
• This is the best time for investors to buy companies at “ridiculously low” valuations, as represented by their price-to-earnings growth or PEG ratio, according to Manish Sonthalia, the head of equities-portfolio management services at Motilal Oswal Asset Management Company.

BloombergQuint compiled the list of the stocks with the lowest PEG ratio.

7. Why Are Vakrangee’s Trade Receivables Spiking

Vakrangee Ltd., which grappled with governance concerns, has seen the number of days it takes to collect money from clients spike fivefold.

• That followed business restructuring after Price Waterhouse & Co. raised concerns over its election books, bullion and jewellery businesses. The auditor eventually quit in May last year, adding to the selloff that has eroded nearly 90 percent of the company's market value.
• Vakrangee had trade receivables of Rs 1,319.62 crore for the year ended March 2019, according to its filings. That compares with Rs 1,307.89 crore in the previous fiscal.
• The company’s revenue collection period was 318 days or more than 10 months in 2018-19, according to BloombergQuint’s calculations based on its exchange filings. In 2017-18, it was 60 days.

What caused the spike?

8. Exports Double Whammy

India’s exports of labour-intensive items, from textiles and handicraft to leather and gems and jewellery, continue to be under pressure, delivering a double whammy to the economy.

• A drop in outbound shipments from these sectors not only impacts the country’s export earnings but also jobs provided by small and medium scale units in these industries.
• Labour-intensive exports contracted for the third straight year in FY19 in dollar terms.
• For the analysis, gems and jewellery, textiles, handloom products, leather, handicraft and carpets were classified as labour-intensive industries.

Costs continue to rise but stagnating exports have brought down profitability. Here are the numbers behind the slowdown.

9. Anil Ambani To Withdraw Congress Defamation Suit

Anil Ambani's Reliance Group has decided to withdraw the Rs 5,000-crore civil defamation suits filed in an Ahmedabad court against Congress leaders and National Herald newspaper over their statements and an article on the controversial Rafale fighter jet deal.

• The suits were being heard in the court of city civil and sessions judge PJ Tamakuwala.
• “We have intimated the defendants that we are going to withdraw the suits against them,” the complainant's lawyer, Rasesh Parikh, told PTI on Tuesday.

The formal process to withdraw the suits will be taken up in the court when it resumes after the summer vacation.

10. Lessons From Facebook’s Fake News Fight In India

The world’s largest election has become something of a test case in how technology giants handle fake news after years of scandal. It’s not working out so well.

• Particularly challenging for would-be fact-checkers, from Facebook Inc. to Google, is the country’s 23 official languages.
• Facebook has hired contractors to verify content in 10 of those languages, but those staffers are spread thin and posts in more than a dozen other languages -- Sindhi, Odia and Kannada among them -- are completely unvetted.
• Facebook, Twitter Inc. and Google parent Alphabet Inc. are discovering the harsh reality that disinformation and hate speech are even more challenging in emerging markets than in places like the U.S. or Europe.
• A new category of users, recently digital, believe almost whatever they receive -- especially if it comes from family or friends. Hundreds of millions read in languages the American tech giants haven’t even begun to monitor.

It is this parallel “dark space” where disinformation spreads like fire.