New Delhi: Standard & Poor’s has sounded another warning. This time, the ratings agency warned that it could cut the credit ratings of the European Union and large Euro zone banks if a mass downgrade of member countries materialises. The move, if it actually happens, will increase the borrowing-costs of the European Union, reports Reuters.
Meanwhile, the European Central Bank (ECB) is expected to cut interest rates and unveil an aid package for banks when it meets later in the day. A Reuters survey of 73 analysts showed a 60% chance the ECB will cut rates by 25 basis points.
Thursday and Friday are going to be eventful days for the European region. While ECB will be meeting today to consider monetary measures, the region’s political leaders will hold a summit tomorrow to discuss ways to contain the debt crisis.
Overnight, stock markets in the US rose on hopes the Euro zone will figure out a solution to its debt problems. The S&P 500 at 1,261 closed up by 0.20%.
Stock markets in Asia, on the other hand, opened on a weak note. Japan’s Nikkei is down 0.79% to 8,653. Japanese shares fell after machinery orders unexpectedly fell in October.
Back home, the subsidy bill of the union government is growing by leaps and bounds. Finance minister Pranab Mukherjee said that the total subsidy bill for 2011-12 could exceed estimates by up to Rs 1 trillion, reports NDTV Profit. The higher subsidy bill will put further pressure on the fiscal deficit, which is widely expected to exceed 5%.
Rating agencies may downgrade more power firms. Delays in project executions, stretched receivables and heavy debt are expected to weigh on power utilities’ repaying capacity. Crisil lowered its ratings on 12 power companies in the eight months ended November.
Keep an eye on Natco Pharma stock. Dilip Shanghvi, promoter of Sun Pharmaceutical Industries has bought a minority stake in the company for Rs 18.34 crore, reports The Economic Times. Yesterday, the company’s shares jumped 15% to Rs 278 apiece.
SKS Microfinance is restructuring its business. The company is planning to hive off its gold loan business into a separate subsidiary and expand its non-microfinance business. The microlender also said it will cap the return on assets from its main business at 3%.
Logistics provider Container Corporation of India is planning to develop 13 multi-modal logistics parks across the country, reports Business Standard. According to the report, the company has already started work on two projects.
Coromandel International acquired an additional 27.75% stake in Sabero Organics Gujarat. With the latest acquisition, Coromandel International’s stake in Sabero will increase to 36.75%. Sabero makes a variety of fungicides and has around 250 product registrations in over 50 countries. Read The Economic Times report.
Petronet LNG is likely to finalise an agreement for sourcing liquefied natural gas from Russia under a pact with Gazprom, reports The Economic Times. In June, Gazprom had signed a preliminary deal with Petronet for the supply of 2.5 million tonnes of LNG annually.
To thwart takeover bids, Dena Bank is seeking to grow its balance sheet, reports The Economic Times. Due to a relatively small size, the lender fears that it is vulnerable for acquisitions.
Finally, most global investors are predicting China will face a banking crisis within the next five years. According to a Bloomberg Global Poll, 61% of the respondents anticipate a crash in the financial industry by late 2016, and only 10% were confident China’s banks will escape trouble.