Why TCS and Tata Motors stand to lose from Brazil’s rating downgrade to ‘Junk’ status
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The downgrading of These companies might see their stocks come under pressure on the bourses due to the weakness in the Brazilian economy.
Moreover the US rating agency said mounting political turmoil and the difficulties faced by President
The Indian companies, which have sizeable exposure to the Brazilian market, include United Phosphorous and
There are also others like Lupin,
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Let’s see what happened after the US rating agency downgraded Brazil:
Ø Stocks of companies with revenue exposure or investment plans in Brazil fell in Thursday's trade. Oil and Natural Gas Corp and
Ø Shree Renuka Sugars, which made acquisitions in Brazil recently, fell 1.6%. UPL plunged 4.5%.
Ø Torrent Pharma dropped 3%, Glenmark Pharma fell 1.9%, while Cadila Healthcare was down half a per cent.
Ø Lupin declined 2%, while Sun Pharma was down 0.3%. KEC International slipped 2.3%, while Rallis India was trading flat. Praj Industries and MM Forgings fell 2.6% each.
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In April 2008, Brazil was awarded an investment-grade rating by the US rating agency. At that time the country's economy was on rise. However, sliding commodity prices and austerity have created a recession.Earlier this week, economist said Brazil's Gross Domestic Product is expected to contract by 2.3% and the nation will have to borrow to cover all its interest payments (if interest payments are included, the total deficit this year is projected to be 8-9%).
The faster-than-anticipated downgrade of the nation from investment grade will likely rock Brazilian financial markets and increase borrowing costs for the government and Brazilian companies.
(Image: Indiatimes)
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