Equity markets continue negative trend; Sensex recovers over 100 points

The Indian equity markets continue with their losing trend amid downgrade of the U.S. government's credit rating and the resultant sell-off in the Asian markets. Investor's escaping out of equities to safer assets on rising fears of double dip recession in West. The Sensex recovered over 100 points from the day's low and Nifty moving towards 5,100 levels as there was a bit of buying at lower levels in the late morning session. Shares of companies like BPCL, ONGC and Coal India were trading in green on the BSE contradicting the falling rally as crude oil prices slipped further. Brent crude was trading at $105.79 a barrel, down $3.58. On sectoral front IT and realty are the worst performers at this hour and followed closely by TECk and metal while, there was no gainer on the index. Automobile, capital goods, bank, healthcare and power stocks are taking a hammering as well. FMCG and refinery stocks are also drifting lower. On global front major Asian equity markets fell by 2-4% as the credit ratings agency Standard & Poor's recently downgraded US long term debt from AAA to AA+. The sell-off in Italian and Spanish bonds also continued to weigh on the markets. However, Finance chiefs from the G7 group of major industrial powers pledged to take whatever action was needed to stabilize markets that have been losing faith in political leaders' ability to tackle the twin debt crises in Europe and the United States. Back home, the market breadth too witnessing negative trend; there were only 315 shares on the gaining side against 2,263 shares on the losing side while 62 shares remained unchanged.

The BSE Sensex is currently trading at 16,895.60, down by 410.27 points or 2.37%. The index has touched a high and low of 16,907.57 and 16,759.45 respectively. There were only 2 stocks advancing against 28 declines on the index.

The broader indices too were witnessing fall; the BSE Mid cap and Small cap indices were trading down by 2.50% and 3.19% respectively.

Although the entire BSE Sectoral space was hammered down, however, IT down by 5.12%, Realty down by 4.93%, TECk down by 4.51%, Metal down by 3.16% and Auto down by 2.52%, were the top losers on the index.

The only gainers on the index were Coal India up by 0.27% and ONGC up by 0.11%. While DLF down by 7.23%, Tata Motors down by 6.18%, Infosys down by 5.43%, TCS down by 5.28% and Wipro down by 4.77% were the top losers on the index.

Meanwhile, on downgrading of US sovereign rating from AAA to AA+ with a negative outlook, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan said, this will negatively impact country's exports as US is the biggest market and moderate capital flows into the country but overall economic growth will remain robust at 8.2 percent.

This downgrading of the US will have adverse impact on the country's trade flow and capital flow as the slow pace of recovery in the United States would affect the demand for the goods and the capital movement across the borders. "Slow growth of the US and Europe will have some adverse affect on the Indian exports, particularly on export of services", C Rangarajan said. By adding further he said, 'Uncertainty in the world can also result in less capital flow to the developing economies like India. However, I think the US will not lapse into recession. It will grow at 1.5 percent in this calender year."

PMEAC Chairman believes that the Indian economy will grow around 8.2 percent despite the uncertainty in the global economy. Earlier, Finance Minister also said that the downgrading of US sovereign rating will have some implications on India, but there is no need to press panic button as fundamentals of the economy remains strong.

Last week, rating agency Standard and Poor's (S&Ps), for the first time in history reduced the credit rating of the US from AAA to AA+, this development is likely to affect the investors' confidence in the US Economy.  The rating agency also said that predictability about US policy making and political institutions have weakened at a time of fiscal challenge. However, US Treasury official said that the decision of S&P, was flawed.

The S&P CNX Nifty is currently trading at 5,091.65, down by 119.60 points or 2.30%. The index has touched a high of 5096.40 and low of 5054.05 respectively. There were just 6 stocks advancing against 44 declining ones on the index.

The top gainers of the Nifty were ACC up by 1.90%, Ambuja Cement up by 1.60%, GAIL up by 1.14%, BPCL up by 0.68% and NTPC up by 0.15%. While HCL Tech down by 7.70%, DLF down by 7.16%, Tata Motors down by 6.32%, TCS down by 5.48% and Reliance Capital down by 5.44% were the major losers on the index.

All the Asian equity indices too were witnessing the intense pressure; Shanghai Composite was down by 3.41%, Hang Seng was down by 3.93%, Jakarta Composite was down by 4.99%, KLSE Composite was down by 3.06%, Nikkei 225 was down by 2.14%, Straits Times was down by 4.62%, Seoul Composite was down by 3.44% and Taiwan Weighted was down by 3.82%

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