Exit wound for exit polls

Also in today’s edition: BigBasket’s big play; Short sellers are in a funk

Good morning! Whisky-loving India is now falling for tequila shots. The Economic Times reports tequila sales have jumped over threefold since the pre-pandemic times. And it's not just a big city trend. Bartenders in smaller towns such as Lucknow, Ladakh, and Tawang are also pouring tequila for thirsty guests. Maybe its popularity shouldn’t surprise us. After all, Bollywood and Punjabi singers have been hyping up tequila for over a decade now. Any of those tequila-laced lyrics coming to mind?

🎧 The election result no one saw coming. Also in today’s episode: a beauty pageant with an AI twist. Tune in to SpotifyApple PodcastsAmazon MusicGoogle Podcasts, or wherever you get your podcasts.

Anjali Palod and Anup Semwal also contributed to today’s edition.

The Market Signal* 

Stocks & Economy: Indian markets were primed for the absolute Bharatiya Janata Party (BJP) majority projected by exit polls. That did not happen. The Sensex and Nifty tanked nearly 6% — the worst rout since March 2020 — just a day after stocks had surged 3.4%.

Analysts have warned of overvalued Indian stocks for a while now. High-flying “Modi stocks” may finally get a reality check. That isn’t bad news because corrections are good for markets.

The GIFT Nifty indicates a firm start, but Barclays analysts reckon indices will remain jittery for some time and a premium will be placed on Indian bonds. The RBI will “maintain its presence” in the foreign exchange market to limit rupee weakness. The currency, which fell the most in over a year after the election results, mirrors similar falls in South Africa’s rand and Mexico’s peso after those emerging economies also had shock election results over the last few days.

Elsewhere, other Asian stocks rose after speculation that the Fed would finally lower interest rates because of US jobs data. Job openings in April were at their lowestsince 2021.

RETAIL

Big Basket Bets On Not-So-Quick Commerce

Online grocery delivery service BigBasket recently relaunched its slotted delivery format as 'BB Super Saver', offering customers savings ranging from 6-10% compared to quick commerce. With a wide selection of over 25,000 products and delivery times as early as two hours, the company wants to tap into India’s value-conscious consumers seeking discounts. While competition from quick commerce remains strong, BigBasket sees an opportunity in providing a more affordable option for customers willing to wait longer for deliveries. The launch of BB Super Saver is a response to changing consumer preferences and the need to cater to a market that values affordability over convenience. Head to The Core to find out where this format figures in BigBasket’s long-term plans. 

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

In today’s episode, he speaks to Deven Choksey, MD of DRChoksey FinServ, Dipen Mehta, founder-director at Elixir Equities, and Viktor Katona, lead crude analyst at Vienna-based energy intelligence firm Kpler.

MARKETS

The Not So Big Short

Hindenburg Research is the exception, not the norm. Turns out that short sellers aren’t doing well.

Wut?: Short sellers losing $838 billion in May due to yet another GameStop rally is not even the half of it. Bloomberg reports that bullish sentiment in the US, currently spurred by the AI stocks frenzy, has made it hard for legendary short sellers to sustain their positions too. One of these is Jim Chanos, who converted his hedge fund into a family office last year after his assets tanked to $200 million from $6 billion in 2008.

Road ahead: Short bets are now being routed through futures and ETFs, or in “investable markets” such as Vietnam as investors wary of China eye other countries.

POLITICS

Ab Ki Baar, Teen Sau Bhi Nahi Paar

For our non-Hindi speaking readers, the above translates to “This time, not crossing even 300”. It’s a riff on the ruling National Democratic Alliance’s (NDA’s) election slogan, “Ab ki baar, chaar sau paar” (“This time, crossing 400”).

The NDA, led by PM Modi’s BJP, crossed the halfway mark of 272 and will form the government*. But no one — not even Modi’s staunchest critics — anticipated that the opposition, INDIA, would win 232 seats.

The result is testament to the waning appeal of mandir politics. Just months after the Ram Mandir was inaugurated, the Faizabad constituency in which Ayodhya is located was won by the Samajwadi Party’s Awadhesh Prasad by a margin of over 54,000 votes. It’s one of the biggest upsets alongside Amethi, Baharampur, Coimbatore, and the states of Odisha, Uttar Pradesh, Maharashtra, West Bengal, and Telangana.

The Signal

*When asked whether INDIA is open to essentially poaching NDA partners Chandrababu Naidu and Nitish Kumar to craft a true-blue upset, Rahul Gandhi said his bloc would discuss the same today. At this point, anything is possible.

Whatever the outcome, the result is a slap on the business of exit polls, which we cautioned against when estimates projected that the BJP alone would glide past the halfway mark. Such polls have gotten it wrong at least six times since 2004.

India will have a stronger opposition, which will make the passage of contentious bills more difficult. This is good news: the world’s largest democracy deserves to function like one.

FYI

Beijing bound: Airbus is negotiating a sale of over 100 upgraded A330neo aircraft to China, Bloomberg reports.

Misled?: Tesla chief Elon Musk exaggerated the company’s AI chip procurement deal and diverted 12,000 Nvidia GPUs to social media platform X instead, CNBC reports.

New horizons: Cisco has launched a $1 billion fund to invest in AI startups such as Mistral, Cohere, and Scale.

It’s official: The boards of Tata Motors Finance and Tata Capital have given the approval for both companies to merge.

THE DAILY DIGIT

218,674

The record number of NOTA (None Of The Above) votes in Indore, Madhya Pradesh. The option, which rejects all candidates in a constituency, is the runner-up after BJP’s Shankar Lalwani. (Election Commission Of India

FWIW

AI beauty queens, anyone?: Alright, this joke's been beaten to death, but we can't help it: we were promised flying cars, underwater cities, and colonies on the moon and Mars, but what are we getting? A freakin' beauty pageant for AI influencers. Also, as it turns out, the Miss AI contest, launched by AI monetising platform Fanvue, isn’t all that different from Miss World and Miss Universe. Just go to Instagram and take a look at the handles of the contest’s 10 semi-finalists announced last Monday. All of them are unmistakably young, with petite frames, high cheekbones, and full, pouty lips. So far, so typical. Btw, Indian AI influencer Zara Shatavari has also made it to the list. In the pageant, Zara and other AI influencers will now be judged not only on the basis of (stereotypical) standards of beauty, but also, the finesse with which they’re created and the clout they've managed to gather on social media. Prize? $5,000 in cash and a dedicated publicist. Who said we are jealous? 🫠 

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