The benchmark BSE Sensex on Friday plunged 330 points after Moody’s cut India’s credit rating outlook, citing concerns on the economic growth front. The rupee also depreciated 31 paise to 71.28 against the US dollar, amid worries over foreign capital inflows in the wake of the change in outlook.
Though the Sensex briefly hit a fresh intra-day high of 40,749.33, it failed to sustain the momentum and finally ended 330.13 points, or 0.81 per cent lower at 40,323.61. Similarly, the broader NSE Nifty plunged 103.90 points, or 0.86 per cent, to end at 11,908.15.
The Sensex had closed at fresh lifetime highs in three of the five sessions this week, while the Nifty had reclaimed the key 12,000-mark after five months. Moody’s Investors Service cut India’s credit rating outlook to negative, the first step towards a downgrade, saying the Centre has been partly ineffective in addressing economic weakness, leading to rising risks that growth will remain lower.
Vinod Nair, head of research, Geojit Financial Services, said, “Rating downgrade forced investors to book profit in a volatile market and rupee weakened to three-week low. Given the subdued performance of the equity market during the year, MF inflows fell to four-month low while premium valuation of large and blue-chips is not attracting new funds in the market.”
Siddhartha Khemka, head—retail research, Motilal Oswal Financial Services, said, “While lowering of rating outlook is negative, we believe the government is trying to stimulate growth and hence a shift from its previous fiscal prudence. The government has taken various measures, including one of the boldest reforms in the form of corporate tax cut.”
Sun Pharma, Vedanta, ONGC, TCS, HUL, ITC, NTPC, Asian Paints and Infosys shed up to 4.23 per cent. On the other hand, Yes Bank, IndusInd Bank, ICICI Bank, Kotak Bank, Tech Mahindra and HCL Tech rose by up to 3.76 per cent.
Sectorally, BSE FMCG, metal, oil and gas, healthcare, IT, teck, telecom and power indices fell up to 1.80 per cent.
BSE realty, bankex and consumer durables indices rose up to 1.55 per cent. The broader BSE midcap and smallcap indices too fell by up to 0.79 per cent.
Meanwhile, MSCI, the world’s biggest index compiler, has added eight Indian stocks including HDFC Asset Management, Info Edge (India) and Indraprastha Gas Ltd to its India Index, while removing Vodafone Idea, Yes Bank, BHEL, Glenmark Pharmaceuticals, Indiabulls Housing Finance and L&T Finance Holdings.
MSCI also added seven stocks and deleted four from the MSCI Global Standard Index. The additions include Berger Paints, Colgate, DLF, HDFC AMC, ICICI Prudential Life, SBI Life, and Siemens. The deletions from the global index include Glenmark, Indiabulls Housing, Vodafone Idea, and Yes Bank.