Sensex drops 162 pts on S&P downgrade warning
The Sensex today tumbled by 162 points to close at 18,631.10 on across-the-board selling due to Standard & Poor's warning of a one-in-three chance of India's rating being downgraded in two years.business Updated: Oct 10, 2012 17:11 IST
The Sensex on Wednesday tumbled by 162 points to close at 18,631.10 on across-the-board selling due to Standard & Poor's warning of a one-in-three chance of India's rating being downgraded in two years.
The S&P' downgrade threat came a day after the IMF slashed the country's growth forecasts for 2012 to 4.9%, dampening the sentiment further.
After resuming over 100 points lower, the BSE benchmark index failed to stage a recovery amid fresh concerns over the sluggish global economic growth and Eurozone debt crisis.
The rupee also wilted under pressure and fell below the 53-mark against the US dollar in early trade.
With 27 stocks of the 30-share Sensex ending lower, the Sensex closed near day's lows at 18,631.10, down 162.26 points or 0.86%. Likewise, NSE Nifty fell below 5,700 level by losing 52.45 points, or 0.92%, to 5,652.15.
S&P analysts Takahira Ogawa and Elena Okorochenko on Wednesday said that its negative outlook on India signals at least a one-in-three likelihood of a downgrade of the sovereign rating on India within the next 24 months.
Traders said investors hurriedly cut positions as S&P's warning of a downgrade comes a day after IMF cited low business confidence and "sluggish structural reforms" for lowering its growth forecast for India.
SBI, which dropped 2.32%, was the biggest loser among Sensex. It was followed by Tata Power, Hindalco, BHEL, NTPC and M&M. Wipro fell by 1.72% while Infosys fell 1.3% ahead of September quarter results on Friday.
Private lenders HDFC Bank and ICICI Bank dropped around 1% each. However, ITC, RIL and Hero MotoCorp bucked the negative trend.
Barring FMCG index, the other 12 sectoral benchmarks on Wednesday fell. Realty shares were hit hard after DLF tanked 5%.
Overall, just 978 stocks on Wednesday advanced while 1,929 scrips declined as market breadth was significantly negative.
Dealers said a weakening trend in the Asian region and lower opening in Europe also hit the domestic market trading.