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BQuick On June 24: Top 10 Stories In Under 10 Minutes

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

1. Viral Acharya’s Resignation Doesn’t Worry Experts

Reserve Bank of India Deputy Governor Viral Acharya on Monday announced his resignation from the central bank. Acharya’s resignation comes six months after Urjit Patel quit as governor amid a standoff with the government. Like Patel, Acharya, during his term, had taken a stance different from that of the government on issues like the RBI’s balance sheet, liquidity and, most recently, on fiscal risks.

  • Too much should not be read into his decision to step down a few months before his term was set to end, said public policy veterans.
  • His exit will have a limited impact on markets and on expectations of the policy path ahead, Nomura's Sonal Varma said.
  • The exit of any one official should not have an outsized impact on policy decisions, S. Narayan, former finance secretary to the Indian government, said.

Should the markets be worried?

2. RBI Surplus Reserves Report Deferred...Again

The Bimal Jalan panel, which is looking at the appropriate amount of capital that the central bank should hold, has deferred its report for the second time.

  • It will meet again in July and submit its findings after the government presents the Union Budget for 2019-20 on July 5, one of the committee members told reporters.
  • Set up in December, the former Reserve Bank of India governor-headed panel was supposed to submit its report by April-end. It had sought a three-month extension till June end.
  • In its June 12 meeting, the committee had said it would meet again this month as the members failed to reach a consensus on the amount of capital that the apex bank needs to hold.

Finance Secretary Subhash Chandra Garg skipped the meeting.

3. Rana Kapoor’s Family Plans A Sale

Rana Kapoor’s family is planning to sell a stake in their six-year-old mortgage finance company, people with knowledge of the matter told Bloomberg News, as rising wariness in the credit market erodes growth prospects of shadow finance firms.

  • The family office run by the three daughters of the Yes Bank Ltd. co-founder is working with Nomura Holdings Inc. on the potential deal, according to the people, who asked not to be identified as the information isn’t public.
  • It has reached out to several private equity firms to gauge their interest, the people said.
  • While default at Infrastructure Leasing & Financial Services Ltd. triggered a liquidity crunch in India’s credit market, it has helped private equity firms such as Blackstone LP acquire assets.
  • Many founders -- from tycoon Anil Ambani to media mogul Subhash Chandra -- are selling assets to tide over a liquidity crunch.

Here’s what the family’s next step could be.

4. Sensex Dips, U.S. Stocks Fluctuate

Indian equity benchmarks ended lower for the second consecutive trading session, dragged by metal stocks.

  • The S&P BSE Sensex ended 71.53 points or 0.18 percent lower at 39,123.
  • The NSE Nifty 50 index ended below 11,700, down 0.2 percent.
  • The broader market index represented by the NSE Nifty 500 Index closed 0.18 percent lower.
  • Nine out of 11 sectoral gauges compiled by NSE ended lower.

Follow the day’s trading action here.

BQuick On June 24: Top 10 Stories In Under 10 Minutes

U.S. equities fluctuated near records as investors weighed expectations for easier monetary policy against rising tensions in the Middle East.

  • The S&P 500 was mixed as falling health-care stocks countered gains by banks.
  • European shares fell, dragged lower by carmakers as Daimler AG cut its profit forecast for the third time in a year.
  • The 10-year Treasury yield dropped to 2.03 percent, while West Texas crude traded below $58 a barrel.
  • The euro touched a three-month high against the dollar even as data showed that a slump in German business confidence deepened in June.

Get you daily fix of global markets here.

5. Why Glenmark Shares Fell To Six-Year Low

Shares of Glenmark Pharmaceuticals Ltd. fell to their lowest in six years on Monday after the company said the U.S. Food and Drug Administration didn’t approve its key nasal spray—a move that will delay the launch of the product in one of the biggest markets for most Indian drugmakers.

  • The U.S. FDA issued a complete response letter regarding the new drug application for Ryaltris—used for treating seasonal allergic rhinitis or swelling of mucous membrane of the nose—citing deficiencies in the drug master file pertaining to one of the active pharmaceutical ingredients and in the manufacturing facilities of Glenmark.
  • Glenmark, however, expects the issue to be resolved in the next six to nine months.
  • The drugmaker was earlier targeting to launch this nasal spray in the U.S. in October this year.

The adverse U.S. FDA letter may delay the launch of the product.

Also read: Why Credit Suisse Turned Positive On Lupin After Three Years

6. Super Kings, On And Off The Field

What if one of the most popular IPL teams were to list on the stock market? Investors could double their money in six months. A struggling non-banking lender could get some funds. And a bunch of former players could turn richer.

  • In January this year, Chennai Super Kings investors received their promised shares in a private market transaction.
  • The company’s share price has doubled since then—from Rs 16 to Rs 32-35 apiece—in the over-the-counter market, according to two people involved in the transactions. They spoke on the condition of anonymity as they are not allowed to talk to the media.
  • At this share price, assuming all rights to convert debt to equity are exercised, CSK is worth Rs 1,200-1,320 crore ($171 million), according to BloombergQuint calculations.

Here’s why these numbers are not surprising.

7. A Cheaper, Indian Zara

For nearly a decade, Tata Group has been Inditex SA’s partner running Zara stores in India. Now, the country’s largest conglomerate is building its own apparel empire as trend-focused as Zara -- but at half the price.

  • Its retail arm, Trent Ltd., has fine tuned its local supply chain to deliver “extreme fast fashion” which can get runway styles to customers in just 12 days, the same compressed timeline that’s turned Inditex into a $90 billion empire.
  • Zara owner, the world’s largest apparel retailer, is known for its lightning-quick product turnarounds and bringing new designs from the drawing board to store shelves within few weeks.
Now that we’ve built this capability and this model that’s working so well, it’s time to grow faster.
Noel Tata, Chairman, Trent

Here’s what Trent is betting on and who it’s targetting.

8. 'Finalise, Implement Direct Tax Code'

A parliament panel suggested that the government should finalise and implement the Direct Tax Code to simplify and rationalise direct tax laws.

  • That would help widen the tax base and collections, the Parliamentary Standing Committee on Finance said in its preliminary report.
  • The report of the panel, headed by Congress leader Veerappa Moily, was presented to the Lok Sabha Speaker on March 23 but was tabled today.
  • Other members of the panel include former Prime Minister Manmohan Singh, Bharatiya Janata Party leader Kirit Somaiya and Trinamool Congress’ Dinesh Trivedi, among others.
  • A task force led by Akhilesh Ranjan is already reviewing the Direct Tax Code and has been given two extensions. It’s expected to submit its report by July 31.

9. Blowing The Whistle On Insider Trading

If Securities and Exchange Board of India is seeking to emulate the U.S. SEC’s whistleblower programme, it has a tough act to follow, writes Umakanth Varottil.

  • SEBI circumscribes the informant mechanism only to insider trading matters, whereas its utility may very well extend to the entire gamut of securities market offences.
  • A bounty system, if left unchecked, could lead to frivolous information or actions that are motivated by extraneous considerations.
  • Unless the staffing concerns that have more broadly afflicted SEBI are addressed, there is a risk that the mechanism will not enjoy the intended success.

SEBI’s reasoning is noteworthy, but success ultimately lies in support through appropriate resourcing measures.

10. Bitcoin’s Back Above $11,000

Bitcoin traded above $11,000 for the first time in 15 months, recouping more than half of the parabolic increase that captured the attention of mainstream investors before the cryptocurrency bubble burst last year.

  • “The bounce-back of Bitcoin has been fairly extraordinary,” said George McDonaugh, chief executive and co-founder of London-based blockchain and cryptocurrency investment firm KR1 Plc.
  • “Money didn’t leave the asset behind, it just sat on the sidelines waiting to get back in,” he said.
  • Bitcoin surged as high as $11,251.21 on Monday, a 13 percent gain from late Friday that put it at the highest levels since March 2018.

Bitcoin’s ride back is puzzling onlookers trying to pinpoint a reason for the surge.

Bloomberg Quint

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