It was a terrible Tuesday for the Indian stock and foreign exchange markets with the Sensex and the rupee plunging over escalating tension in Syria and a fresh threat by Standard & Poors on downgrading India.
The sell-off was so massive that the Sensex tanked 651 points and the currency breached the 68 per dollar mark in intra-day movement. However,standard gold shot up by Rs 970 to finish at Rs 32,510 per 10 grams and the benchmark 10-year government bond rose by 12 basis points to 8.58 per cent.
The sentiment turned more pessimistic after reports said Russia had detected two ballistic objects fired towards the eastern Mediterranean from the central part of the sea. It was later found to be a joint missile test by the US and Israel. If all this drama was not enough,reports said that Standard & Poors chances of a credit ratings downgrade had increased for India. This added to the selling pressure, said Amar Ambani,Head of Research at IIFL.
Erasing almost three days of gains,the Sensex,which started above the 19,000 mark,fell to close at 18,234.66,a decline of 3.45 per cent. The NSE Nifty closed at 5,341,down 209 points. The currency started weak and fell sharply in line with stocks to a low of 68.27,before recovering to settle at 67.63,still down by 163 paise or 2.47 per cent.
We have a negative outlook on India. We think the chances of a downgrade in the next one to two years is one out of three, Kim Eng Tan,an analyst at S&P,said in Seoul. S&P is the only one among three major credit agencies to have a negative outlook on Indias BBB-minus sovereign rating,and any downgrade would send the country to junk.
Tan called the chances of a downgrade on India higher than on Indonesia,which is also reeling from waning confidence in its economy.
Circuit limit on daily basis now: Sebi
MUMBAI: Sebi on Tuesday asked stock exchanges to calculate circuit limits the maximum permissible movement allowed in the Sensex or Nifty movement in a trading session on a daily basis as against the current practice of doing the same on a quarterly basis.
Currently,the stock exchanges calculate the circuit filters on the basis of the level attained by Sensex and Nifty at the end of every quarter and the same limits are applicable for every day of trade for the next three months. The new calculation would apply for 10 per cent,15 per cent and 20 per cent circuit limits in Sensex and Nifty,the two benchmark indices of Indian stock market,with effect from October 1,2013. While 10 per cent and 15 per cent limits result into temporary trading halts,a 20 per cent movement triggers into trading getting halted for the entire day. ens