Sensex falls 330 points on Moody's India outlook downgrade, rupee tumbles

The benchmark Sensex on Friday fell 330 points after rating agency Moody’s revised India’s credit rating outlook citing growth concerns. Overseas flows and gains in ICICI Bank after MSCI rejig helped mitigate the fall. 

Moody’s economic assessment fuelled fresh concerns around the growth outlook and its impact on corporate earnings. The rating agency lowered the outlook to negative from stable, saying the economic growth could remain materially lower than in the past. It said the government could face significant constraints in maintaining the fiscal deficit and preventing the rising debt burden. 

Sensex ended the session at 40,323.61, down 330 points, or 0.81 per cent, while the Nifty 50 index ended at 11,908, down by 104 points or 0.9 per cent.

The rupee was the worst-performing Asian currency against the dollar, declining 0.45 per cent to end at 71.29. The 10-year government yield rose five basis points to end at 6.56 per cent.

The fall in the rupee was despite buying worth nearly Rs 1,000 crore by foreign portfolio investors (FPIs) in the equities cash segment. Domestic institutions sold shares worth nearly Rs 600 crore.

Market players said Moody’s outlook underscored some of the marco concerns, however, steps taken by the government as well as the Reserve Bank of India (RBI) will prevent the economy from sliding further.

“The government has been trying to stimulate growth through various measures including taking one of the biggest reforms in the form of corporate tax cut. The RBI also been supportive so far through its accommodative monetary policy. In our view, this will take time to work on the ground and reflect in numbers,”said Motilal Oswal, founder and chief executive officer of Motilal Oswal Financial Sevices.

On the Sensex, 25 stocks fell, while only six managed to log gains. Shares of ICICI Bank rose 2.3 per cent and made a 67-point positive contribution to the index. The gains were following index provider MSCI’s increased the weightage during the semi-annual review. Some analysts pegged FPIs inflows of $1 billion into ICICI Bank following the weight increase. 

Top losers in the Sensex pack included Sun Pharma, Vedanta, ONGC, TCS, HUL, ITC, NTPC, Asian Paints and Infosys, shedding up to 4.23 per cent.

On the other hand, Yes Bank, IndusInd Bank, ICICI Bank, Kotak Bank, Tech Mahindra and HCL Tech rose up to 3.76 per cent.

Barring three, all 19 sectoral indices of the BSE ended the session with losses. The decline was led by FMCG stocks that fell by 1.8 per cent, while metal and Oil and Gas stocks fell 1.74 and 1.72 per cent, respectively.