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Journalism of Courage
Standard and Poor’s decision to lower India’s local currency debt ratings to ‘junk’ status rattled stock markets in the country on Friday. Though the markets fell as much as 1.53 per cent in early deals, the benchmark Sensex staged a partial recovery later and ended with a 15-point loss (0.52 per cent).
The rupee, on the other hand, recovered from the initial shocks of the downgrade and closed flat at 48.41/42 against the dollar. Since most of the stocks had been battered mercilessly over the last couple of trading sessions, dealers say, the fall was modest after the downgrade. “The downgrade would not affect the country’s economy in the short run… but we have to wait and see whether foreign inflows will be affected,” said dealer Surendra Podar.
“The downgrade impacted sentiment,” said Ashish Goyal of Prudential Asset Management, adding that falls were limited because the market had already reckoned with the issues raised by S&P.
After touching a low of 2,993.78 in opening trades, Sensex settled at 3,024.35, down 15.95 points from its previous close. The NSE S&P CNX Nifty Index shed 6.44 points to close at 969.60.
PSU stocks, especially those of fertiliser and refinery firms, attracted buying support on market buzz that Prime Minister A B Vajpayee has called a meeting to put the privatisation programme back on track.
“The market is hoping the downgrade will eventually turn out to be a blessing as the government may take tough steps to address the fiscal situation,” said Prashant Jain, the chief investment officer at Zurich India Asset Management.
