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Stocks stumble after Moody’s rap

The benchmark index has hit record highs in the past few sessions

Our Special Correspondent   |   Mumbai   |   Published 08.11.19, 07:49 PM

The move by Moody’s Investors Service to cut the rating outlook on India to negative from stable pushed the benchmark Sensex down 330 points.

The index opened marginally lower at 40630.56, hit a fresh intra-day high of 40749.33, but could not sustain the momentum. It finally ended down 330.13 points, or 0.81 per cent, at 40323.61.

Similarly, the broader NSE Nifty fell 103.90 points, or 0.86 per cent, to end at 11908.15.

The Sensex had closed at fresh lifetime highs in three of the five sessions this week, while the Nifty had reclaimed the key 12000-mark after five months.

Experts, however, feel a much larger crash was averted because of an optimism among investors that the steps taken by the government and the RBI to revive the economy would yield results in the long term.

The benchmark index has hit record highs in the past few sessions after corporate results beat Street estimates and the US-China trade talks showed signs of progress.

Moreover, measures such as the Rs 25,000-crore stressed fund for the real estate sector have led to hopes that more relief measures could be in the offing.

“It is important to understand that Moody’s had only lowered the outlook and not downgraded India’s credit rating. India’s high debt-to-GDP ratio is one of the factors that weighed in lowering the outlook. In the present global context of extensive fiscal stimulus to counter the slowdown, slight fiscal slippage is not a serious issue,” V.K. Vijaykumar, chief investment strategist at Geojit Financial Services, said.

According to Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services, while the lowering of rating outlook is negative, the government has been trying to stimulate growth and hence a shift from its previous fiscal prudence.

“It appears that the government would be using some of the non-traditional routes, including divestment/privatisation, to fill the income gap. The long term fundamentals of the Indian economy continues to remain strong with the expected gradual recovery in growth and a domestic consumption driven economy,’’ he said.

On Friday, only six stocks in the Sensex pack ended in the green with Yes Bank leading the list of gainers as its stock rose 3.76 per cent.

Top losers included Sun Pharma, Vedanta, ONGC, TCS, HUL, ITC, NTPC, Asian Paints and Infosys, which fell up to 4.23 per cent.

Market circles added that investors will be watching out for key macro numbers next week.


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