Moneycontrol Pro Weekender | Facing off

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Dear Reader,

Has Elon Musk had a change of heart over acquiring Twitter or does he have a new trick up his sleeve? The maverick billionaire genius and Twitter, the social media platform he wooed, have no love lost between them now. But Twitter sued Musk to close the deal on his original terms. But before the trial, he did a surprising U-turn proposing to acquire Twitter on the same terms as before.

Has his love for Twitter triumphed his suspicions of it being a bot-infested platform? This FT news analysis (free to read for Pro subscribers) details the twists and turns in the case so far that may have led to Musk’s decision. But Twitter's not going to trust so easily now. It asked the court to get Musk to give an iron-clad undertaking to complete the acquisition but Musk’s terms show his offer is subject to banks fulfilling their financing commitments. That’s perhaps where a sticking point may lie.

The judge has deferred the hearing to October 28 to let the parties reach a deal, giving Musk a win as there is no binding commitment. If the two fail to agree on a deal, the court will come back into the picture. The stakes are high, Musk had valued Twitter at $44 billion, at $54.20 a share but it fell to as low as $32.65 a share after he attempted to walk away. If its intrinsic value is lower than Musk’s offer price, how will he get this investment to pay back? He tweeted after his U-turn: ‘Buying Twitter is an accelerant to creating X, the everything app’. Some have interpreted that as a sign that he wants to build a super app like WeChat. But first things first, let’s see if Musk ties the knot finally.

Another faceoff took place, this time between leaders of countries and one that has repercussions for the world. US president Joe Biden’s relief at oil prices coming down in the past few months, in the run-up to the mid-term elections, got a rude shock from Opec+. The oil cartel was expected to cut output by 1 million barrels per day (bpd) but it set the target at twice that number. The US had been pushing for no cuts and in fact had been pushing for a price cap on Russian oil, and is even selling it to emerging markets saying they will save billions.

That long-time ally Saudi Arabia did not side with it, although observers were not surprised to see the cracks in their relationship widen, did make the US bitter. Whether this event leads to an escalation of matters, with the US releasing oil from its strategic reserves or taking even stronger measures to keep oil prices down remains to be seen. We wrote about how the production cut has more signalling value than an actual impact as output had already fallen. We also wrote about four things that investors should keep a watch over on the oil front.

While billionaires fought and world leaders crossed swords, the stock markets globally continue to exhibit wide swings in behaviour. Rising market stress is a worry for global financial markets and this FT article (free to read for MC Pro subscribers) cautioned about the risks of a big financial accident while this one argued that it’s time for investors to learn a new game. We wrote about how the rupee should be left alone, how the ghost of Lehman Brothers is haunting investors, and also advised investors to learn from the FII experience of investing in Indian stocks and getting it right. We also pondered over the irony that prevails in equities now, where bad news on the economic front is viewed as good news by investors. India's markets ended on Friday, October 7 higher than a week ago.

We had a rich line-up of articles in the past week to help you invest and also make better sense of what’s happening in the world of finance and business.

Investing ideas from our research team

Consumption

Festive season, easing of supply woes bring cheer to automakers

FMCG earnings update: Operating profitability to recover in H2FY23

Weekly tactical pick: CEAT

Ruchira Papers: Should investors bet on this paper stock?

SCIL: This MNC-backed agrochemical player has huge growth potential

Delhivery: Moderating growth clouds near-term outlook

IPO: Electronics Mart India: Will this consumer electronics IPO be a hit?

Bosch: An auto component leader with encouraging outlook

Muthoot Finance: Can stock correction be a reason to buy?

Grauer & Weil: Strong business traction, attractive valuation to support stock

Companies and Sectors

Global IT slowdown signals Indian tech’s fall from grace

What explains the revival in real estate?

Unilever and HUL's contrasting fortunes show growing clout of Indian consumers

NTPC’s defensive characteristics are holding up, for now

PLI | Making industry future-ready is a marathon task

India should consider energy and interest rate subsidies to ensure growth doesn’t falter

Consumers are spending, but not on everything.

Macros and markets

These are ironical times, when a slowing economy triggers an equity rally

Credit growth brings cheer but deposits are not playing ball

Currency markets | Let the droopy rupee be

Are European currency markets warning of turbulence ahead?

RBI surveys don’t echo the central bank’s upbeat assessment of Indian economy

A financial stability storm could upset RBI’s optimism

Economic Recovery Tracker | Unemployment goes up, but festival season lights up auto sales

 Other topical issues

SC ruling limits broad sweep of insider trading

This is what the curriculum revamp panel at IIT-D must do to fix engineering education

China’s strategic moves in the Middle East call for India’s attention

The loyalty factor in Congress elections and its history of chaos

The Eastern Window: US puts India’s independent foreign policy to test

Cheers,Ravi Ananthanarayanan