BQuick On June 26: Top 10 Stories In under 10 Minutes

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

1. RBI Eases Some Data Localisation Rules

More than a year after the Reserve Bank of India asked all payment system operators to store transaction data only in India, the regulator has issued clarifications on some aspects of its rules.

• The clarifications allow payment companies to process transactions overseas but say that the data must eventually be stored in India.
• In a set of FAQs issued on Wednesday, the RBI said that payment operators are permitted to process data abroad if they so desire.
• However, if transactions are processed overseas, the data on overseas servers will have to be deleted within 24 hours, the RBI said.
• The RBI has also clarified that data can also be shared with overseas regulators depending on the nature of the transaction and with due approval of the Indian regulator.

Here are the conditions specified by the RBI.

2. HDB Financial’s Rs 10,000-Crore IPO

HDFC Bank Ltd. has picked Bank of America Corp. and Morgan Stanley to manage an initial public offering of its non-bank finance unit HDB Financial, people with knowledge of the matter told Bloomberg News.

• The bank plans to sell the shares in HDB Financial Services Ltd. before March 31 in a deal that may raise about Rs 10,000 crore, the people said, asking not to be identified as the information is not public.
• HDFC Bank may hire more firms for the sale later, the people said.
• Selling shares in the unit will help the bank led by Managing Director Aditya Puri raise funds to expand lending as many non-bank financiers grapple with a liquidity crunch.

The credit profile of HDB Financial has remained unscathed despite the NBFC crisis.

3. L&T’s Mindtree Takeover Is Almost Done

Larsen & Toubro Ltd. has acquired a majority stake in software services firm Mindtree Ltd., bringing its three-step takeover—aimed at deploying cash better—closer to completion.

• Mindtree shareholders have tendered 30.5 percent stake so far in the open offer for 31 percent launched by L&T, according to disclosure to exchanges.
• L&T acquired 19.9 percent from VG Siddhartha and Coffee Day Group, and 8.9 percent from the market.
• Once the Mindtree open offer ends on June 28, its holding will cross 59.5 percent.

That will culminate L&T’s acquisition of the mid-sized software services provider.

4. Piramal Capital, Edelweiss Downgraded

ICRA Ltd. downgraded the debt instruments issued by Piramal Capital and Housing Finance Ltd. and Edelweiss Financial Services Ltd. due to their exposure to the real estate sector.

• The outlook on the rating for both the non-bank lenders is now negative, the rating agency said in separate statements.
• While there’s a concentration risk in the real estate and structured debt segments that Edelweiss Financial Services is exposed to, according to the rating agency, Piramal Capital has large-sized exposures to the real estate and infrastructure segment.
• The rating action on the two relatively stronger non-bank lenders will only add to concerns about India’s non-banking financial sector that has been facing a liquidity crunch following the defaults of IL&FS group last September.

That has a ripple effect in the property market as developers find it hard to raise funds.

5. Nifty Closes At Two-Week High, U.S. Stocks Rise

Indian equity benchmarks ended higher for the second day in a row driven by a rally in metal stocks.

• The S&P BSE Sensex rose as much as 0.40 percent or 157 points to 39,592.
• The NSE Nifty 50 gained 0.43 percent or 51 points to 11,847.
• The broader market index represented by the NSE Nifty 500 Index gained 0.52 percent.
• Level of 11,845 is the recent consolidation high and as that hurdle is breached Nifty is expected to head towards 12,000 levels, according to Ruchit Jain, a technical analyst at Angel Broking.
• Nine out of 11 sectoral gauges compiled by NSE advanced.

Follow the day’s trading action here.

U.S. technology shares gained on strong earnings from a leading chipmaker, while Treasuries fell with gold as trade tensions appeared to ease.

• The Nasdaq indexes rose after Micron Technologies Inc.’s profit topped estimates. Chipmakers Intel Corp. and Cisco Systems Inc. also rallied.
• The S&P 500 pared early gains as heath-care shares and consumer staples weighed on benchmarks.
• Futures rose overnight on signs that the Trump administration won’t escalate its trade war with China at this weeks’ G-20 meeting, but the president later warned he could ramp up protectionist policies against the country if a trade deal isn’t reached.
• Ten-year Treasury yields pushed above 2 percent, while oil rose to a four-week high on supply concerns, and gold retreated. The dollar gained for a second day.

Get your daily fix of global markets here.

6. Airtel Africa IPO Pricing

Bharti Airtel Ltd.’s initial public offering of its Africa unit is expected to price at 80 pence a share, the bottom of its range of 80 pence to 100 pence, according to terms seen by Bloomberg News.

• The books, which close at 2 p.m. in London on Thursday, are oversubscribed on the full size of the deal, the documents show.
• Bharti is seeking to raise $750 million on Friday through listings in London and Nigeria, to pay down debt that swelled during a years-long price war in India.
• Bharti also faces a hefty bill to upgrade its domestic mobile network to fifth-generation services. The Indian telecom regulator expects carriers to spend $70 billion on 5G.

Airtel Africa sale is expected to be among the largest IPOs announced in 2019 in London.

8. Extent Of Auto Inventory Pileup Revealed

Scooters and motorcycles are the biggest contributors to inventory piled up at dealerships even as India’s automobile sector hopes for the demand to revive.

• Demand for cars, two-wheelers and trucks has slowed, and is reflected in year-on-year drop in both wholesales or units moving out of the factory gate, and retail volumes based or vehicle registrations, according to data collated from the Society for Indian Automobile Manufacturers and the Ministry of Road Transport and Highways.
• There has been an uptick in month-on-month volumes though, and they stood at their highest since December in May for all categories.

But that masks the actual problem. BloombergQuint calculated the ratio of wholesales-to-retail volumes for a clearer picture.

9. Audit Firms Set To Face Tough New Rules

India is considering tougher rules for audit firms, including a cap on the number of listed companies they can examine, a person with knowledge of the matter told Bloomberg News.

• To stamp out conflicts of interest, the corporate affairs ministry is also weighing either a complete ban on non-audit services or limiting the revenue generation from consulting businesses such as advising companies on restructuring and valuing mergers, the person said, asking not to be identified as the information isn’t public.
• The ministry, which governs the nation’s professional body of chartered accountants, is in early stages of discussing these changes that may be introduced later in the year by amending the Companies Act, the person said, without providing further details.

The proposed crackdown comes after a recent spate of governance lapses.

10. India-U.S. Differences Linger

U.S. Secretary of State Michael Pompeo and his Indian counterpart stressed the strength of their two countries’ ties after a morning of meetings but reported little progress in resolving disputes over trade, defense and energy that have weighed on the partnership.

• “Harmonising our interests and our views, that’s really the task of diplomacy and I think Secretary Pompeo would agree with me today that we have earned our pay,” External Affairs Minister Subrahmanyam Jaishankar said at a briefing alongside the top U.S. diplomat in New Delhi.
• He said a key part of having a strategic relationship “is to comprehend the other nation’s interest.”
• That was a reference to India’s continued desire to buy the Russian-made S-400 missile defense system, a move that could trigger U.S. sanctions.

Pompeo’s visit wasn’t intended to seal final agreements on the issues faced by India and the U.S.