IMF, S&P Reports Keep Markets Down

The Indian markets had a weak trading day today, moving southwards and closing the day at almost their lowest point. Both the broader indices ended lower almost 0.9%. This was after global credit rating agency S&P warned over the potential downgrade of the economy.

All the sectoral indices moved lower. The BSE FMCG Index was the only one closed marginally in the green. The Realty index was among the worst hit, plunging by 4.61%. Other indices like Power, Bankex and Capital Goods also closed in the negatives.

Of the other Asian markets, Shanghai was up by 0.22% while Hang Seng and Nikkei closed lower by 0.08% and 2.02% respectively. Bloomberg reports said that the concerns about China’s economic slowdown and its territorial dispute with Japan are weighing on the corporate earnings.

The European indices are currently trading lower in the negative territory. FTSE, CAC and DAX are in losses in the range of 0.2%-0.4%. It is being said that the economic fundamentals don’t justify current stock valuations, which are near their highest since 2010.

Dow Jones Futures is currently trading 117 points or 0.87% down at 13407, indicating a negative sentiment in the US markets.

Most of the global markets are looking nervous after the International Monetary Fund (IMF) lowered the global growth forecast by 20 basis points to 3.3% for FY2012. It has revised the growth downwards for developed nations like US and Europe. In case of India, the growth is been significantly lowered by 130 basis points to 4.9% for the fiscal, which is probably the lowest in the decade. IMF's growth forecast for India is the lowest, with the other rating firms and research houses forecasting it to be in the range of 5.5%-6.5%.

Back home, there is a long list of losers in today’s trade. India biggest bank, SBI was the highest index loser, closing lower by 2.32% at Rs 2227.20 per share. Private banking majors HDFC Bank and ICICI Bank were also down by 1.2% and 0.97% respectively. Tata Power, Hindalco and BHEL lost more than 2% each. Infosys closed lower by 1.29% at Rs 2504.25 per share, ahead of its September quarter numbers which are due to be released on Friday. Other stocks like HUL, TCS, Coal India, Bajaj Auto, Tata Steel, L&T, HDFC, etc. were also in the negatives at day's end.

There were only 3 index stocks which closed their day in gains, viz. ITC, Hero MotoCorp and RIL, which closed higher by 0.36%, 0.33% and 0.09% respectively.

The market breadth, which indicates the overall health of the market, remained on the negative side. Out of the 3031 stocks traded on the BSE, 1929 declined, 978 advanced and 124 remained unchanged.

We expect the markets to remain volatile for tomorrow.