S&P Cuts India Outlook To Negative, Markets Down 0.6%

The Indian equity markets have converted their morning gains into losses after the ratings agency S&P cut the outlook for the country from 'stable' to 'negative' due to the widening current account deficit. The rating remains BBB-, but S&P has said that if the external position changes, there could be a potantial downgrade of the country. At the moment, the rupee has appreciated by 0.18% to 52.58 per dollar, while it has depreciated by 0.16% against the Euro to 69.49. After the S&P cut the outlook, the Finance ministry has said that this only an outlook cut but not downgraded India.

Amid this chaos on the domestic front, the Asian indices are trading firmly in the positive. Nikkei and Shanghai have surged by 0.98% and 0.75% respectively, while Hang Seng has continued trading in the flat.

The European indices have also opened in the green today.

Among the Sensex participants, Bharti Airtel has trimmed its morning gains and is trading 1.52% up. Maruti, Bajaj Auto and Hero Motocorp are still trading in the green. Sterlite and HDFC Bank are the only other stocks that are trading in the green amid the negative sentiment. Wipro continues to trade with 7% losses. GAIL, BHEL and L&T have also lost 2% each.

From the sectoral indices, only the FMCG index is up by 0.05%. All the other indices are trading in the negatives. CD, CG, Realty, Power, IT and PSU stocks are taking the maximum beating at the moment.

In individual stocks, the shares of United Spirits are still trading in positives. Indiabulls Finance and Wockhardt are also trading with more than 2% gains. Lanco Infra has lost 5.61% as the outlook for the Power sector remains weak following Coal India’s recent actions. Reliance Power has also lost 4.5%.

The companies which have recommended dividends this afternoon are India Cements, LIC Housing Finance, Motilal Oswal and D B Corp.

The volumes are strong for Lanco Infra, ACIL, SpiceJet, Kingfisher Airlines, Alok Industries, Suzlon Energy, etc. Bata India and Kajaria Ceramics are still trading at all-time highs, while Mukta Arts, Minolta Finance, Ashiana Agro, etc. are trading at lows. Companies like Grasim Industries, Britannia Industries and Lupin are showing a jump in volumes.

Yesterday's institutional stastics on the BSE indicate that FIIs were net sellers, while DIIs were net buyers. The last 2 days' activity for FIIs' indicates they are not bullish on the Indian equity markets. The exit of Macquarie hedge fund on tax woes indicates the same.

The market breadth is extreme negative at this time. Of a total of 2675 stocks traded, 862 stocks have advanced, 1688 stocks have declined and 125 stocks have remained unchanged.