Markets extend losses on S&P’s warning of credit downgrade

After opening on a negative note, Indian equity market extended some losses after the rating agency Standard & Poor's warning that there is significant chance of India getting credit downgrade in future. A day before yesterday, the International Monetary Fund slashed India's growth forecast to 4.9% for 2012 from 6.1% earlier. Investors are wary of taking on risk on worries that Europe’s debt crisis will deepen and further moist global growth. The 30-share BSE Sensex dropped 129 points, while the 50-share NSE Nifty slipped 41 points. In currency markets, Indian rupee continued downward slide against dollar for the fourth consecutive day, on increasing dollar demand from importers and bank. On sectoral front realty, power, information technology, oil and automobile stocks were trading in red, while only FMCG sector was trading in green. In global markets, Asian stocks were trading in red on concerns that the corporate results season will reveal weaker earnings in the face of flagging global economic growth. Back home, the market breadth favoring negative trend; there were 850 shares on the gaining side against 1,575 shares on the losing side while 152 shares remain unchanged.

The BSE Sensex is currently trading at 18,663.95 down by 129.41 points or 0.69% after trading in a range of 18,740.63 and 18,645.16. There were 6 stocks advancing against 24 declines on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.98% and Small cap index was down by 1.03%.

The only gainer on the BSE sectoral space was, FMCG up by 0.08%, while, Realty down by 3.73%, Power down by 1.93%, CG down by 1.45%, Bankex down by 1.20% and PSU down by 1.17% were top losers on the sectoral space.

The top gainers on the Sensex were Hero MotoCorp up by 0.52%, Tata Steel up by 0.43%, Sun Pharma up by 0.42%, ITC up by 0.16% and Reliance up by 0.13%. On the other hand, BHEL down by 2.24%, NTPC down by 2.09%, Gail India down by 1.77%, SBI down by 1.70% and ONGC down by 1.50% were top losers on the Sensex. 

Meanwhile, amid peaking inflation rate and slowing economic growth in the country, the Prime Minister's Economic Advisor C Rangarajan has commented that the nation is now facing a critical situation and urged for policy actions to contain expenditures, especially subsidies, to aid the country to gear up to achieve the potential growth rate. He emphasized that curtailing subsidies is to put a control on increasing fiscal deficit, while raising revenue-GDP ratio should also be in focus, to ensure stable revenue for the nation’s development.

The fiscal deficit had dipped to 4.7% of GDP in 2010-11 while the projection was to fall to 4.6% in 2011-12. The present deficit is 5.9% of GDP, albeit it has been forecasted to dip by 5.1% of GDP in the current fiscal. He opined that the present economic growth is only due to the new economic policy, as it removed all the hurdles in the way of economic growth and pointed that it’s different from 1991 slow down.

He also noted that there was three years of high inflation due to certain severe supply constraints, particularly of agricultural products, thus the need for containing inflation and balance of payments has become more vital to trigger the economic growth, while re-emphasized that high growth does not warrant a higher level of inflation. He also stressed on the need for increasing coal production, and a need for strong economic policy.

By adding further, he also pointed out that the farm economy and the power sector are facing major challenges these days, and called for necessary actions to revitalize the traditional crop agriculture which is very much important to food security and farm income and urged to take more aggressive path of capacity creation in the power sector.

The S&P CNX Nifty is currently trading at 5,663.05, down by 41.55 points or 0.73% after trading in a range of 5,686.50 and 5,658.85. There were 12 stocks advancing against 37 declines while 1 remains unchanged on the index.

The top gainers of the Nifty were HCL Tech up by 1.81%, JP Associates up by 1.41%, ACC up by 0.65%, Hero MotoCorp up by 0.62% and PNB was up by 0.62%. While, DLF down by 3.97%, Siemens down by 3.70%, Reliance Infra down by 2.41%, BHEL down by 2.34% and NTPC down by 2.12% were top losers on the index

Most of the Asian equity indices were trading in the red; Straits Times was down by 1.06%, Kospi Composite was down by 1.45%, Nikkei 225 was down by 1.97%, Jakarta Composite down by 0.03%, Hang Seng was down by 0.17% and KLSE Composite was down by 0.19% while Shanghai Composite was up by 0.12% was the lone gainer.

Taiwan Weighted is closed for trading on account of National Day.