Indian markets are showing volatile trend in the mid morning session of trade and after plunging into red, have once again started gathering strength to trade marginally in green. The concern of the growth outlook downgrade by Fitch is weighing down the sentiments. The Asian markets trend too remained somber and all the rate sensitive sectors have lost their way after the RBI's decision of not going for any policy rate change. Though, there is some buying in the blue chips along with the FMCG and oil & gas sector stocks but the weakness in the broader markets has pulled the breadth down. The non sectoral gauge aviation is under pressure after Aviation regulator DGCA asked domestic carriers to have a "relook at route-wise fares and make them rational and reasonable" in the backdrop of a sudden rise in airfares. Kingfisher was down by 3.30% and Spicejet was down by 1.61%, though Jet Airways was up by 1.61%.
The BSE Sensex is currently trading at 16723.67, up by 17.84 points or 0.11%. The index has touched a high and low of 16802.90 and 16681.89 respectively. The broader indices continued to trade lower; the BSE Mid cap and Small cap indices were down by 0.45% and 0.27% respectively.
The top gaining sectoral indices on the BSE were, FMCG up by 0.90%, Oil & Gas up by 0.53%, Health Care up by 0.51% and Auto up by 0.21%.
On the other hand Realty was down by 1.31%, Power was down by 0.93%, Bankex was down by 0.78%, IT was down by 0.36% and TECk was down by 0.34%.
The top gainers on the Sensex were ITC up by 1.63%, Cipla up by 1.25%, Sun Pharma was up by 1.21%, Tata Steel was up by 1.13% and Tata Motors was up by 1.01%.
On the flip side, Sterlite Inds down by 2.71%, BHEL down by 1.56%, Tata Power down by 1.52%, Coal India down by 1.06% and Infosys down by 1.01% were the major losers on the Sensex.
Meanwhile, refuting global rating agency Fitch's recent downgrade of India's sovereign rating to negative, India's Union Finance Minister Pranab Mukherjee, who has emerged as the front runner in the race for becoming the next President of India, lashed out at the rating firm's recent assessment stating that recent structural reforms in the economy including the strengthening of public finances were not taken in to account. Stating that there was no surprise in the Fitch's recent announcement and it came on expected lines, however the finance minister underscored that Fitch has primarily relied on older data, and has ignored the recent positive trends in the Indian economy.
The finance minister's reaction came in response to the rating agency's press release on India's sovereign credit rating in which Fitch reaffirmed India's long-term foreign and local currency issuer default rating (IDR) at BBB(-) however, it revised Asia's third largest economy's outlook to Negative from Stable. The credit rating firm cited concerns on India's economic growth potential, inflationary pressures and weak public finances as the major challenges, which led to the downward revision in the sovereign rating outlook. Apart from this, the rating agency also downgraded the credit outlook of seven Public Sector Undertakings (PSUs) including NTPC, SAIL, IOC, PFC, GAIL, REC and NHPC.
Fitch's revision in India's outlook has come on the heels of another global rating agency Standard & Poor's recent note in which it has warned that India may become the first among the BRIC (Brazil, Russia, India and China) countries to lose its investment grade rating. Around two months ago, S&P's had reviewed India's sovereign debt rating and though they had reaffirmed the nation's long-term rating but slashed the rating outlook to negative from stable citing weak GDP expansion prospects and the risk that its external liquidity and fiscal flexibility may wear down.
While Pranab Mukherjee stated that the government has already taken note of the concerns that the Fitch brought forward, however he voiced his dismay over the rating agency's assessment of the Indian economy for not taking into account the recent positive developments. He elucidated that there were several positives for the economy viz. RBI's stimulus measures like a cut of 50 basis points key interest rates in April 2012; core inflation declined significantly from 8.7% in May 2011 to less than 5% in May 2012; progress has been made on fuel linkage for coal based power projects; and the quarterly investment growth rate has become positive in the fourth quarter of 2011-12.
The S&P CNX Nifty is currently trading at 5,060.40, lower by 3.85 points or 0.08%. The index has touched a high and low of 5,086.50 and 5,048.10 respectively. There were 21 stocks advancing against 29 declines on the index.
The top gainers of the Nifty were ITC up by 1.67%, Cipla up by 1.31%, SunPharma up by 1.21%, Tata Motors up by 1.11% and Ranbaxy was up by 1.02%. On the flip side, Sterlite Inds down by 2.72%, BoB down by 1.96%, Cairn down by 1.76%, Sesa Goa down by 1.70% and ACC down by 1.69% remained the top losers on the index.
Most of the Asian equity indices were trading in the red; Shanghai Composite declined by 0.56%, Hang Seng Index shed 0.37%, Nikkei 225 was down by 0.73%, KOSPI Composite Index lost 0.30% and Taiwan Weighted declined by 0.48%.
On the other hand, Jakarta Composite rose 0.34%, KLSE Composite gained 0.56% and Straits Times Index was up by 0.51%.
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