Bourses may feel S&P's rating heat
As Standard and Poor’s today downgraded Greece’s credit rating to junk status and cut Portugal’s rating by two notches to A-minus, the domestic bourses are likely to feel the heat tomorrow.
Following the news of the downgrades by Standard and Poor’s, stock markets across America and Europe were in the red. Market players, however, claimed the impact on the Indian markets would be temporary.
“All these kind of developments make the market take a breather. It would certainly not collapse,” said Andrew Holland, CEO-Equities at Ambit Capital, an investment management and brokerage company.
“Indian stock market may turn negative in a knee-jerk reaction, but this could last just for a day or two,” said Dinesh Thakkar, chairman and managing director, Angel Broking. “Though our markets are aligned to global events, downgrades of countries such as Greece and Portugal will not have any sustained impact on our markets.”
“Downgrade of the two countries is just an extension of the existing problems Europe is facing. There should not be a big impact of the Indian stock market,” said S P Tulsian, a market expert. “Investors should look at how the news has impacted the US stock market during the closing hours and Asian stock market in the morning.”
The Dow Jones industrial average dropped 146.61 points, or 1.31 per cent, to 11,058.42. The Standard & Poor’s 500 Index lost 19.30 points, or 1.59 per cent, to 1,192.75 in initial trades. In Europe, amid fears over the crisis deepening, the Stoxx Europe 600 Index slid 3.1 percent at 10 pm IST.
The impact of the downgrades was also felt in the commodities market, with crude oil sinking 2.4 per cent and copper by 4.3 per cent.
Indian stocks fell today, snapping a five-day rally, after the Reserve Bank of India Governor, D Subbarao, said inflation was a big worry and raised fears of further action before the next policy review in late July. The Indian markets had closed before the S&P issued the statement. The Bombay Stock Exchange’s Sensitive Index, or Sensex, declined 0.3 percent, to close at 17,690.62. The S&P CNX Nifty Index on the National Stock Exchange lost 0.3 percent to 5,308.35. The decline was led by index heavyweights Maruti Suzuki, Reliance Industries and State Bank of India.