Banks’ downgrade pushes Sensex 207 points down

November 9th, 2011 - 7:27 pm ICT by IANS  

Sensex Mumbai, Nov 9 (IANS) Indian equities fell sharply in afternoon trade Wednesday with a benchmark index closing 218 points lower as credit agency Moody’s downgraded the rating of Indian banks.

The 30-scrip sensitive index (Sensex) of the BSE, which opened at 17,641.98 points, closed at 17,362.1 points, down 207.43 points or 1.18 percent from its previous close at 17,569.53 points.

The 50-scrip S&P; CNX Nifty of the National Stock Exchange also dived in late trade to close 68.3 points or 1.29 percent lower at 5,221.05 points.

Broader markets also closed in losses with the BSE 500 index ending 1.29 percent lower. The BSE midcap index was closed 1.25 percent down while the BSE smallcap index ended 1.06 percent lower.

Banks were the biggest losers after rating agency Moody’s downgraded the outlook for Indian banks saying the asset quality of various lenders could deteriorate in the next 18 months given high inflation levels, monetary tightening and rising interest rates.

The news sent banking stocks tumbling at Indian stocks markets with the banking index at the Bombay Stock Exchange (BSE) closing 2.62 percent lower.

The rating agency changed its outlook for India’s banking system to negative from stable. The outlook applies for the next 12-18 months and was applicable to some big names in the sector such as State Bank of India, Axis Bank, Bank of Baroda.

The market breadth at the BSE was negative with 991 stocks advancing and 1,879 scrips declining, while 104 remained unchanged.

The prominent Sensex gainers included Hindustan Unilever, up 2.85 percent at Rs.391.30; Wipro, up 2.14 percent at Rs.376.60; TCS, up 1.77 percent at Rs.1,123 and Hero MotoCorp, up 0.91 percent at Rs.2,134.10.

The losers on the benchmark were: SBI, down 6.76 percent at Rs.1,862.50; Tata Steel, down 4.08 percent at Rs.448.80; Maruti Suzuki, down 3.82 percent at Rs.1,080.15; ICICI Bank, down 2.16 percent at Rs.861.75 and RIL, down 1.96 percent at Rs.864.55.

In Asia, markets closed higher as concerns over Italy’s debt problems eased after Italian Prime Minister Silvio Berlusconi announced he would resign once key economic reforms are adopted.

Investors also took hope from latest Chinese data, which showed the country’s inflation slowing sharply in October. This could result in the Chinese central bank easing interest rates to support growth.

The Japanese Nikkei closed 1.15 percent to close at 8,755.44 points, while Hong Kong’s Hang Seng ended 1.71 percent up at 20,014.43 points.

The Chinese Shanghai composite index also moved up 0.84 percent and closed at 2,524.92 points.

European markets, fell after a positive start.

Britain’s FTSE was trading 1.73 percent lower at 5,471 points, while the French CAC 40 was ruling 2.34 percent down at 3,069.68 points.

The German DAX was also trading 2.47 percent down at 5,814.06 points.

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