Markets fall over 1% on weak global cues

The BSE Sensex shed 676.53 points, or 1.02 per cent, to close at 65,782.78. The 30-share index fell by 1,028 points during intraday trades. The broader Nifty ended at 19,526.55, down 207 points, or 1.05 per cent.

Fitch Ratings has downgraded the US rating to ‘AA+’ from ‘AAA’ over concerns of fiscal deterioration expected in the next three years and repeated debt-ceiling negotiations with last minute resolutions that have eroded confidence in fiscal management.“This action spurred a rapid retreat from riskier assets. However, hopes that the US Federal Reserve was near the end of its interest rate hiking cycle and a still-resilient economy put a floor to the downbeat mood,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

Tata Mutual Fund in a note said the rating downgrade is unlikely to lead to a major impact in debt, currency and commodity markets. The previous rating downgrade for the US debt came in 2011 by S&P, which had then led to steep stock market declines and rise in bond yields.

Kotak Securities Ltd Head of Research (retail) Shrikant Chouhan said that a sharp sell-off in Asian and European markets gave investors a reason to encash on the recent upsurge. Foreign Institutional Investors seem to have sold off local equities after the record rally last month.

“Also, we are seeing valuations getting stretched, and with a lot of uncertainty still around in the global arena on interest rates and higher inflation levels, investors are likely to pare their exposure at regular intervals in the near to medium term,” he said.

All sectors ended in red with PSU bank, metals, and auto being the top losers. Nifty Bank closed at 44,995.7, down 1.31 per cent.

Among the Nifty 50 companies, Hero Motocorp, Tata Steel, Tata Motors, Bajaj Finserv and NTPC were the top losers. Nestle India, Hindustan Unilever, Asian Paints and Tech Mahindra were the top gainers.

On Wednesday, foreign investors sold Rs 1,877.84 crore of domestic equities on a net basis, according to the provisional data from the BSE.

“Going ahead, markets could remain subdued given the gloomy global environment. Stock-specific action is likely to continue in the market with the ongoing result season,” said Siddhartha Khemka, Head (Retail Research) Motilal Oswal Financial Services Ltd.