July 29: News Views
July 29: News Views
Euro notes are spread out at a bank branch in Madrid
Rating agency Moody's put Spain on review for a possible downgrade on Friday, adding to concerns that a Greek rescue package has done little to halt the spread of Europe's debt crisis.
Moody's move to place the Aa2 government bond rating on review cited concerns over growth and said funding costs would continue to be high in the wake of eurozone leaders' bolder moves to curb the Greek crisis last week.
That added to a sense that Spain - and Italy - are still firmly in the firing line, and the euro and Spanish bond prices fell in response.
Particular focus rested on Spain's regional governments, many of whom are struggling with burgeoning debt loads after a decade of reckless spending. Analysts fear control over regions' debt loads is slipping out of the central government's grasp.
An electrician speaks on his mobile phone in Mumbai
Idea Cellular, India's fourth-largest mobile carrier by subscribers, on Friday reported a lower-than-expected 12% fall in quarterly profit, sending its shares up more than 3%.
Higher interest costs and tax provisioning dragged profit, Idea, part of the cement-to-retail conglomerate Aditya Birla Group, said.
Idea, which last year spent $1.3 billion to buy third-generation (3G) radio spectrum, said it was "aggressively expanding" its 3G network and reiterated that it would have 3G coverage in 3,000 towns by next March.
With more than 850 million mobile connections, India's is the world's second-biggest market for phone services after China, but operators have traditionally sacrificed profits to chase growth, resulting in wafer-thin margins for the sector.
A customer uses his card to withdraw money from an ATM
India's second-largest lender ICICI Bank lagged market estimates with a 30% rise in first-quarter profit, as strong loan growth and lower provisions for bad loans were offset by higher expenditure.
The bank said net profit in the June quarter rose to Rs 1,332 crore ($302 million) from Rs 1,026 crore a year ago. Its net interest income (NII) grew 21% to Rs 2,411 crore.
A Reuters poll had projected net profit at Rs 1,420 crore and NII at Rs 2,450 crore for the bank, which is also listed in New York.
Its provisions and contingencies fell more than 40% to Rs 454 crore due to improvement in asset quality. Net non-performing assets fell to 1.04% at June-end from 1.87% a year ago.
Most Indian banks, including top lenders State Bank of India and HDFC Bank have seen a rise in loan demand in the past few quarters in India.
However, higher interest rates are expected to curb consumer spending
A customer checks different types of rice, with their price tags displayed, at a market in Mumbai
Consumers are likely to feel the pinch of rising food prices in the upcoming festive season, as erratic rainfall in growing areas and thin stocks coupled with high demand could push up prices further.
Higher food prices during festivals may also create fresh problems for the government, which has been struggling over the past several months to contain inflation.
India's food price index rose 7.33% in the year to July 16, government data on Thursday showed.
The unexpectedly sharp hike in key rates by the RBI on Tuesday will also add to consumers woes.
"Festivals are there from next month. They will boost demand. We may see further rise in prices of edible oil and pulses," said Badruddin Khan, associate vice-president, research, at Angel Commodities Broking.
A bird flies by the Vedanta office building in Mumbai
India-focused mining group Vedanta posted record first-quarter core earnings, driven by continued strength in metals prices and higher zinc production.
The London-listed firm said earnings before interest, tax, depreciation and amortisation (EBITDA) increased 33% to $1.055 billion in the three months to the end of June. Sales jumped 44% to $3.4 billion.
First-quarter output of refined zinc, Vedanta's most profitable product, rose 17% to 193,000 tonne on higher volumes from the Dariba zinc smelter commissioned in March 2010.
Subsidiary Hindustan Zinc has already reported first-quarter results marginally above expectations, with zinc output up 17% and a 70% jump in its bottom line.
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