India's credit standing internationally is now just a notch above junk. Credit rating agency Standard & Poor's (S&P's) on Tuesday lowered the outlook on India's sovereign rating from 'stable' to 'negative', citing a deteriorating fiscal situation and a challenging economic environment, made worse by profligate spending by the government. 

A downgrade would be bad news for Indian companies, who would have to pay higher interest rates on their overseas loans, since rates are pegged to country ratings. The stock market, too, will feel the pinch.

Venkatesan Vembu & Joel Rebello/ DNA-Daily News & Analysis Source: 3D Syndication