A commuter looks out from behind the grill of a train window at Bandra railway station in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

BQuick On August 23: Top 10 News Stories In Under 10 Minutes   

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

1. WhatsApp Rejects India’s Demand To Build Traceability Software

WhatsApp said it cannot build software to trace origin of a message on its platform, turning down a demand from the Indian government that wanted a solution to track fake or false information, resulting in crimes like mob-lynching.

  • The company continues to hold its stance that it cannot trace the origin of messages because of end-to-end encryption.
  • A WhatsApp spokesperson added that people rely on the messaging app for all kinds of “sensitive conversations”, including with their doctors, banks and families.
WhatsApp will not weaken the privacy protections we provide.
WhatsApp Spokesperson

Read more about WhatsApp’s snub.

2. Liberty House Willing To Wager Over $5 Billion On India’s Stressed Assets

It’s a once-in-a-lifetime opportunity to buy businesses in India if you are a picker of stressed assets. The Liberty House Group says it is and is willing to invest serious money to bag some of these assets.

  • The eventual investment that the group makes will depend on the assets it manages to win through the insolvency process. Liberty House emerged as the successful bidder in the case of at least two stressed companies—Amtek Auto Ltd. and Adhunik Metaliks Ltd.
  • The investment in Amtek Auto, together with affiliate businesses, works out to a little more than $1 billion, said founder Sanjeev Gupta, while adding that Adhunik Metaliks is a small investment.
  • The company is still in the race for two other large assets--Bhushan Power & Steel Ltd. and ABG Shipyard Ltd.
In general terms, our comfort zone in different hubs has been $5-10 billion. That’s the point at which we feel we have scale in a country.
Sanjeev Gupta, Founder, Liberty House

Here’s more insight into Liberty House’s India plans.

3. L&T Approves Rs 9,000-Crore Share Buyback

Larsen & Toubro Ltd. will buy back as much as Rs 9,000 crore worth of its shares, in a first for the country's largest construction and engineering company.

  • The company will repurchase 6 crore shares (or 4.3 percent of equity) at Rs 1,500 apiece, according to its stock exchange notification.
  • The price is higher than the stock’s all-time high of Rs 1,470 that it clocked on Feb. 1.

Here’s what analysts made of L&T’s buyback.

4. Sensex, Nifty Inch Higher; U.S. Stocks Flat

Indian equity benchmarks extended their record-breaking spree led by information technology and fast moving consumer goods shares.

  • The S&P BSE Sensex Index rose 0.13 percent or 51 points to 38,337.
  • The NSE Nifty 50 Index climbed 0.1 percent or 12 points to 11,583.
  • Benchmarks moved in a narrow range as gains in FMCG and IT shares was offset by losses in banking and metal stocks.

Follow the day’s trading action here.

U.S. stocks fluctuated and the dollar rallied as investors weighed fresh tariffs against the pending outcome of the latest trade talks with China and Mexico.

  • The S&P 500 was mixed in thin trading as traders awaited the end of a U.S.-China meeting after the two countries slapped tit-for-tat tariffs worth billions of dollars on each other.
  • The dollar rose for the first time in six days.
  • 10-year Treasury yield traded around 2.82 percent ahead of scheduled comments by Federal Reserve chairman Jerome Powell on Friday.

Get your fix of global markets here.

5. These Are India’s Most Expensive Stocks

Consumer goods, considered a defensive investment in times of volatility, is the most expensive sector for investors as India’s benchmark indices scale new peaks riding on select stocks.

  • Broader markets remain tepid with only 17 of the 228 companies with a market valuation of at least Rs 10,000 crore trading at 52-week highs as of Aug. 21.
  • That pushed up their price-to-earnings multiple, making them costlier for investors.
  • Eight of the most expensive stocks, with market capitalisation of over Rs 10,000 crore are in the fast moving consumer goods sector, while three are in the information technology segment.
  • Pharmaceuticals and financial segments have two expensive stocks each.

Here’s a snapshot of India’s most expensive indices and stocks.

6. Why Morgan Stanley Thinks India Won’t Feel The Emerging Market Pain

Morgan Stanley remains bullish on India even as it sees developing economies on the cusp of a bear market.

  • A cyclical pick-up in the business cycle coupled with rising earnings expectations drives the optimism of the brokerage, which maintains its ‘Overweight’ rating on India.
  • Jonathan Garner, Morgan Stanley’s Asia emerging market equity strategist praised the Reserve Bank of India for "preemptively" hiking interest rates, calling it a “wise move”.
Had they not hiked rates the way they did, the rupee would have seen further weakness.
Jonathan Garner, Morgan Stanley
  • The brokerage, however continues to forecast tough days for emerging markets. It revised its price target on the MSCI EM Index, projecting another 8 percent downside.

These are the sectors that Morgan Stanley likes in India.

7. SEBI Plans To Lower Mutual Fund Expenses

The market regulator wants the mutual fund industry to lower overall expenses for investors amid a debate whether India charges the highest fees in the world.

“We feel there is a scope to rationalise the total expense ratio,” said Ajay Tyagi, chairman, Securities and Exchange Board of India, at a summit organised by the Association of Mutual Funds in India. “We are reviewing the total expense ratio structure very closely.”
  • Morningstar in its October 2017 report said India’s average equity expense ratio at 2.22 percent is among the highest in the world.
  • Foundation of Independent Financial Advisors in another report said at 1.88 percent, the ratio is the lowest among developing nations.

Read what the MF industry and experts have to say.

8. Arun Jaitley Resumes Charge As Finance Minister

Arun Jaitley today resumed duty as minister for Finance and Corporate Affairs after a three-month hiatus.

  • President Ram Nath Kovind, acting on the advice of Prime Minister Narendra Modi, reassigned the portfolios of finance and corporate affairs to Jaitley, the government said in a statement.
  • Sixty five-year-old Jaitley had undergone a renal transplant surgery on May 15, after contracting "certain infections" leading to kidney related ailments.

Read more on Jaitley’s return.

9. India Breaks A Mental Health Taboo. But Is That Enough?

India has taken an important step towards easing financial stress on those suffering from mental health ailments. The Mental Healthcare Act, 2017, has made it compulsory for insurers to cover mental health disorders after the insurance regulator notified the decision on August 16. This is the first move in erasing the line between physical diseases and mental illnesses that are still considered a taboo.

  • An estimated 15 crore—or more than a tenth of—Indians require mental healthcare at any given time, according to the National Mental Health Survey of India 2015-16.
  • Families spend an average Rs 1,000-1,500 a month on treatment and travel to access care. Other hidden and intangible expenses, paid mostly out of pocket, add to their burden.
  • But that will mean costlier insurance.
If mental disorders are covered as part of basic health insurance policies, overall premium may increase for everyone.
Jyoti Punja, Chief Customer Officer, Cigna TTK Health Insurance

Here’s how the problem can be addressed.

10. Trump’s Sense Of Invulnerability Is Facing Its Biggest Test Yet

Donald Trump once boasted during his run for president that he could shoot someone in the middle of Fifth Avenue and not lose voters. Now that sense of invulnerability is in for its biggest test, as he must defend against grave threats on two fronts.

  • On one side, Trump’s contending with the Russia probe led by Robert Mueller, newly energised after the conviction of Trump’s former campaign chairman Paul Manafort.
  • On the other, Trump potentially faces a separate federal investigation into campaign violations sparked by the guilty plea of his former lawyer Michael Cohen.
  • Trump’s power to impose his will on Washington--or even survive politically--may require a wholesale rethinking of how his White House does business, said Chris Whipple, author of a book about White House chiefs of staff.
“We haven’t seen anything like this since the summer of ’73...this White House is coming apart,” said Whipple.

To better understand the two-front war that Trump’s fighting, read this.