Mumbai: The impasse in the winter session of parliament may continue even as the government pushes for reforms to ward off slowdown blues. On Tuesday, parliament was adjourned for the day in the afternoon itself after the Bhartiya Janata Party shouted slogans against home minister P Chidambaram alleging his involvement in the 2G spectrum scam. Political gridlock between the congress and the opposition will make it difficult for parliament to look at 50 legislative bills in 21 sessions.
Overnight, US markets showed signs of distress after third-quarter growth was revised downwards to 2% from the previously estimated 2.5% due to fewer business investments. Compounding it was the much talked about congressional super-committee’s failure to come up with a debt reduction plan. This would kick start a yearlong political fight over automatic reduction on a wide range of benefits – from domestic programs to military. Furthermore it will also expose the country to more downgrades by the rating agencies.
In Europe, there seems to be no respite from high bond yields as investors continue to dump short term debt. Short-term Spanish treasury yields touched an euro-era record high of 5.1%, higher than Greece’s, fanning fears that it will not be able to raise funds if the trend continues. Last week, yields on 10 year paper zoomed to 10%. The spike in yields was also seen in Italy, Portugal, Ireland and Greece, stoking fears that debt ridden countries may be priced out of capital markets.
Asian markets also opened lower tracking weak cues from the US. Japan’s Nikkei was closed on account of a holiday while China’s Shanghai Composite was trading flat, Korea’s Kospi Composite fell 0.7% and Hong Kong’s Hang Seng Index dipped 2%. All eyes were on the manufacturing survey due later today in China.
Back in India, sugar stocks, which have been battered very badly, will be in focus after the commerce minister Anand Sharma said that the government will allow 1 million tonnes of sugar exports from India.
Pipavav Shipyard will be in the spotlight today after the company said that it will sell 5% stake to strategic investor overseas for Rs 900 crore. The strategic investor whose details are not disclosed will subscribe to 5% of the company’s paid up capital that will double in the specified timeframe.
SKS Microfinance will be under the radar on expectations that it may change its business model and founder Vikram Akula may quit. Last year, CEO Suresh Gurumani was sacked after SKS made a stellar listing. P.H. Ravikumar, an independent director is expected to be appointed as non-executive chairman during the board meeting today. The company may also position itself into a rural financial services company.
Lastly, Indian’s growth may be slowing but not for Kraft Foods. It is banking on the Indian consumer’s spending power. North America’s largest packaged food maker which acquired Cadbury Plc wants to become one of the top 5 food companies in the country in the coming years in an effort to offset slowing growth in the developed markets.