S&P downgrade warning hits market, Sensex ends 162 pts down
10 October 2012
Indian shares fell 0.9 percent on Wednesday, in the wake of downgrade warning by the rating agency Standard & Poor's and profit booking. Weak global economic growth and concerns over the ongoing Eurozone crisis also added fuel to the fire.
The BSE Sensex dropped 162.26 points to close at 18,631.10, weighed down by banks, technology, infrastructure and metals stocks.
Today rating agency Standard and Poor's said there is a significant chance of cutting India's credit rating in the future if growth prospects dim, external position deteriorates, political climate worsens or fiscal reforms slow.
This comes even though the government had raised the price of heavily subsidised diesel (along with FDI approval in retail and aviation sectors) last month to rein in its fiscal deficit and fight the threat of becoming the first of the big emerging economies to be downgraded to junk.
S&P had roiled domestic markets in April when it cut India's sovereign outlook to "negative", putting at risk the country's current rating of "BBB-", the lowest investment-grade rating by the agency. India is the only Asia Pacific (APAC) nation to see negative outlook for the Eurozone instability, S&P pointed out.
Meanwhile, the 50-share NSE Nifty fell 52.45 points to 5,652.15, which had rallied 9 percent since the September to hit 5800 level last week on consistent inflow of foreign money.
Experts feel the current correction, which was inevitable after recent sharp run up, should be bought in, especially after looking at the confidence of the government, which has been taking major steps since September to give a boost to sluggish economic growth.
Ashith Kampani, Chairman of CosmicMandala says if this government does more positive steps then it is a great time this correction to be bought in.
European markets were down 0.3 percent each (at 15:31 hours IST) following worries about the economic growth.
Back home, the Indian rupee, which gained upto 51.3 against the US dollar last week, surpassed the 53 level after the S&P warning. It was down by 39 paise to 53.11 a dollar (at 15:31 hours IST).
Infosys, country's second largest software services exporter fell 1.29 percent ahead of second quarter numbers that scheduled to be announced on Friday.
Top lender State Bank of India tanked 2.32 percent while its rivals ICICI Bank and HDFC Bank were down 1 percent each.
Housing finance company HDFC and engineering conglomerate Larsen & Toubro lost 1 percent too. State-run power equipment maker BHEL plunged 2 percent.
Telecom operator Bharti Airtel shed another 1 percent today on profit booking.
Power stocks like NTPC and Tata Power slipped around 2 percent.
Commercial vehicle maker Tata Motors and FMCG major Hindustan Unilever fell 0.7 percent each.
Cigarette major ITC and two-wheeler maker Hero Motocorp gained 0.3 percent.
Jaiprakash Associates rose 2.4 percent on value buying despite UK's CRH Plc has terminated talks to buy Jaypee Cement's Gujarat operations on valuations differences.
HCL Technologies gained 0.8 percent and Punjab National Bank moved up 0.6 percent.
The BSE Midcap Index was down 1.3 percent and Smallcap dropped 1.53 percent.
Declining shares outnumbered advancing by a ratio of 1111 to 365 on the National Stock Exchange.
Realty major DLF crashed 5 percent, continuing the fall since the state of this week.
In the second line shares, GMR Infrastructure, Indiabulls Real and Indiabulls Power plunged 8-9 percent after allegations by India Against Corruption leader Arvind Kejriwal.
NCC, IVRCL, GVK Power, Unitech, Anant Raj Industries, DB Realty, HDIL, Reliance Power and Adani Power fell 4-8 percent on profit booking.
Polaris was down 5.6 percent after its CMD Arun Jain barred by SEBI from capital markets for two years on insider trading charges.
Mahindra Satyam and Hexaware rose 1-2 percent while Firstsource rallied 10 percent.
The 30-share BSE Sensex fell by 155.51 points to 18,638, weighed down by banking & financials, capital goods, power and technology stocks. Profit booking, sluggish global economic growth and warning of downgrade by the rating agency Standard & Poor's have dented sentiment today.
Meanwhile, the 50-share NSE Nifty slipped 51 points to 5,654. The BSE Midcap and Smallcap indices fell 1 percent each as about two shares declined for every share advancing on the BSE.
State-run power equipment maker BHEL and country's largest lender State Bank of India plummeted 2-2.5 percent.
Shares of Infosys, ICICI Bank, Larsen & Toubro and HDFC Bank were down 1 percent each.
Power producers NTPC and Tata Power went down over 1.7 percent. Gas transportation services provider GAIL was down over 1.5 percent.
Real estate firm DLF took a knock for the third consecutive session today, losing 4 percent. Engineering conglomerate Siemens plunged 3.62 percent.
Infrastructure lender IDFC and power distributor Reliance Infrastructure were down over 2 percent.
Shares of Hero Motocorp, HCL Technologies and Jaiprakash Associates outperformed, gaining 1-1.5 percent.
Tata Steel, Sun Pharma, Reliance Industries, PNB and Tata Motors rose 0.1-0.7 percent.
In the second line shares, India Infoline, Info Edge, Aurobindo Pharma, Sun Pharma Advanced and Financial Tech were up 2-4.5 percent while Indiabulls Real, Anant Raj Industries, Apollo Hospital, Tulip Telecom and Pantaloon Retail tanked 5-9 percent.
Indian equity benchmarks remained under selling pressure since early trade due to profit booking, global economic growth concerns and warning of downgrade by the Standard & Poor's. European markets were marginally down in early trade.
The 30-share BSE Sensex fell 136 points to 18,658 and the 50-share NSE Nifty lost 45 points to 5,660. The broader markets fell 1 percent as three shares declined for every share advancing on the National Stock Exchange.
Rating agency S&P said there is a significant chance of cutting India's credit rating in the future. "There is 1 in 3 likelihood of India downgrade in the next 24 months," S&P's Kimeng Tan told CNBC-TV18.
S&P roiled domestic markets in April when it cut India's sovereign outlook to "negative", putting at risk the country's current rating of "BBB-", the lowest investment-grade rating by the agency. India is the only Asia Pacific (APAC) nation to see negative outlook for the Eurozone instability, S&P pointed out.
This comes even though the government had raised the price of heavily subsidised diesel last month to rein in its fiscal deficit and fight the threat of becoming the first of the big emerging economies to be downgraded to junk.
Private oil & gas producer Reliance Industries, two-wheeler major Hero Motocorp, steel manufacturer Tata Steel and drug producer Sun Pharma outperformed with marginal gains.
Country's largest lender State Bank of India fell 2 percent while its rivals ICICI Bank and HDFC Bank were down 1 percent each.
State-owned GAIL, NTPC and ONGC tanked over 1.5 percent. Engineering conglomerate Larsen & Toubro and software services exporter Infosys slipped 1 percent too.
Power stocks like NTPC and Tata Power slipped 1.4-1.6 percent while power equipment maker BHEL was down 2 percent.
Indian shares extended losses after the rating agency Standard & Poor's warning saying there is a significant chance of cutting credit rating of India in future.
The Indian rupee, which was near to 51 last week, fell below the 53 against the US dollar now; it fell by 40 paise or 0.76 percent to 53.12 a dollar.
The 30-share BSE Sensex dropped 132 points to 18,661.25, weighed down by banking & financials, infrastructure and technology stocks. Meanwhile the 50-share NSE Nifty slipped 40.55 points to 5,664.05.
The S&P said there was a significant chance of cutting India credit rating in future. "Eurozone instability is still a risk to Asia-pacific sovereign ratings. Only Asia-pacific nations will see negative outlook post Eurozone instability. Political, economy, fiscal or external factors may lead to downgrade," the rating agency explained.
A day before yesterday, the International Monetary Fund has cut India's growth forecast to 4.9 percent for 2012 from 6.1 percent earlier.
Industrial output for August will be announced on Friday. The Index of Industrial Production growth dipped to 0.1 percent in July, as compared to 3.7 percent in the same month last year.
Since the announcement of reforms by the government on September 12, the market rallied 9 percent, which was largely due to strong inflow of foreign money. Experts feel the foreign inflow has been the driver for Indian markets after the co-ordinated action by Fed, ECB and China last month. But the fundamental of India has not changed yet, even after the announcement of various reforms to revive sluggish economy, experts say.
Country's largest lender State Bank of India tumbled 1.7 percent while its rivals ICICI Bank and HDFC Bank declined over 1 percent.
State-run power equipment maker BHEL extended losses to 2.5 percent while engineering conglomerate Larsen & Toubro was down 1.4 percent.
Infosys, India's second largest software services exporter fell 1.2 percent ahead of second quarter results that scheduled to be announced on Friday.
About three shares declined for every share advancing on the National Stock Exchange.
The 50-share NSE Nifty continued to trade below the 5700 level, which has been its resistance since the start of this week, weighed down by banking and financial, capital goods, technology and power stocks. The Indian rupee, which went near to 51 against the US dollar last week, slipping towards the 53 level again; it was down by 24 paise to 52.96 a dollar.
The BSE benchmark fell 103 points to 18,690.40 and the NSE benchmark went down 31 points to 5,673.75. The broader markets too were down 0.5 percent as declining shares outnumbered declining by a ratio of 1172 to 870 on the BSE.
Amit Gupta of ICICI Direct expects the market to see some consolidation now. The highest put base is formed at 5,600 , so it is unlikely for Nifty to breach this level. However, he suggests buying if Nifty starts inching closer to 5,600 levels.
Country's largest lenders State Bank of India, ICICI Bank and HDFC Bank dropped 0.8-1.3 percent.
Software services exporter Infosys lost 1.5 percent ahead of its results for the quarter ended September 2012 that scheduled to be announced on Friday. Its rivals TCS and Wipro were down 0.3 percent and 1 percent, respectively.
Engineering conglomerate Larsen & Toubro was down 0.9 percent while its rival state-run BHEL tumbled 1.4 percent.
Power producers NTPC and Tata Power fell 1 percent each. Housing finance company HDFC and telecom operator Bharti Airtel declined 0.5 percent each.
Utility vehicle maker Mahindra & Mahindra and state-owned oil & gas producer ONGC were down 1.25 percent each.
World's sixth largest steel manufacturer Tata Steel and drug producer Cipla gained 1 percent. Index heavyweights Reliance Industries and ITC were up 0.2 percent.
The BSE Sensex erased previous day's gains in early trade on Wednesday following weakness in global markets amid sluggish economic growth and concerns over Eurozone.
The 30-share BSE benchmark went down 88 points to 18,705.35 and the 50-share NSE Nifty slipped 28.55 points to 5,676.05. The Indian rupee too declined by 16 paise to 52.88 against the US dollar.
Suresh Mahadevan of UBS expects the Nifty to trade in a range of 5,400-6,250 in the next 3-6 months. "A breakout beyond this range would need sentiment to translate into real fundamental improvement," he says.
Jaiprakash Associates plunged 3 percent as the UK's CRH Plc has terminated talks to buy Jaypee Cement's (a part of JP Associates) Gujarat operations on valuations differences.
Realty major DLF too was down 3 percent after Arvind Kejriwal demand special investigation team (SIT) probe on business relationship between Robert Vadra and the company.
BHEL shed another 1.6 percent on profit booking. Reliance Infrastructure, L&T, SBI, ICICI Bank, Kotak Mahindra Bank, Reliance Industries, Maruti and Bharti Airtel were other losers in early trade.
Infosys went down 0.86 percent ahead of second quarter results that scheduled to be announced on Friday.
Ranbaxy Labs, Cipla and Sun Pharma continued to outperform, rising 0.5 percent each. HCL Tech gained 1 percent.
The CNX Midcap Index rose 32 points to 7,903. About two shares declined for every share advancing on the National Stock Exchange.
In the second line shares, Polaris tanked 5% after the market regulator SEBI has barred its CMD Arun Jain from capital markets for two years on insider trading charges.
Indiabulls Real slipped 3.5 percent and GMR Infrastructure was down 2 percent after Arun Kejriwal named these companies in corruption.
IndusInd Bank declined 1 percent ahead of its September quarter results today.
HDIL and Adani Enterprises were down nearly 3 percent. Pantaloon Retail and Unitech fell 1.4 percent.
Emkay Global bounced back sharply with 5 percent gains. The National Stock Exchange said Emkay Global has met all financial obligations w.r.t freak trade. Therefore, Emkay terminal has been enabled today, the NSE said.
Peninsula Land rallied 6 percent as the company is in pact to develop 190-acre property in Central Mumbai (Sewree).