Shares of nine metal and mining companies fell by 0.68% to 3.36% at 14:10 IST on BSE after global credit rating agency, Moody's Investors Service cut China's sovereign credit rating for the first time in nearly three decades.
Meanwhile, the S&P BSE Sensex was down 2.65 points or 0.01% at 30,362.60.
Bhushan Steel (down 2.62%), Vedanta (down 3.36%), Tata Steel (down 1.11%), NMDC (down 3.48%), Hindalco Industries (down 2.19%), Steel Authority of India (down 2.94%), JSW Steel (down 1.94%), Hindustan Zinc (down 2.97%) and National Aluminium Company (down 0.68%) edged lower. Jindal Steel & Power rose 3.71%.
The S&P BSE Metal index had underperformed the market over the past one month till 23 May 2017, rising 0.34% compared with Sensex's 3.41% gains. The index had also underperformed the market in past one quarter, dropping 6.59% as against Sensex's 5.1% rise.
The downgrading of the China's credit rating has worried the metal investors globally and domestically.
Moody's Investors Service cut China's sovereign credit rating for the first time in nearly three decades, citing expectations that the country's financial strength will deteriorate in the coming years as debt keeps rising and the economy slows.
In a statement today, 24 May 2017, Moody's said it downgraded China's rating to A1 from Aa3, while changing its outlook to stable from negative. In March of last year, it cut China's outlook to negative from stable. Moody's last cut its China credit rating in November 1989, not long after the bloody crackdown on mass protests in Beijing's Tiananmen Square rocked the nation. Moody's now rates China's credit alongside that of countries such as Japan, Saudi Arabia and Israel.
China is the world's largest consumer of steel, copper and aluminum.
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