Shares of Tata Steel slumped over 6 per cent in morning trade on the bourses after the global rating agency S&P downgraded the company on weak operating performance.
Standard & Poor's (S&P) yesterday downgraded steel major Tata Steel to 'BB-', a low investment grade rating, over persistent subdued operating performance amid subdued demand and low steel prices.
Following this, the shares of the company opened on a weak note at Rs 235.60 then lost further ground and tanked 6.19 per cent to touch an early low of Rs 231.70 on the BSE.
On the NSE, the stock opened at Rs 235.00, then declined 6.12 per cent to touch a low of Rs 231.50.
Marketmen said the fall in the counter was largely a knee jerk reaction to S&P's downgrading of corporate credit rating. Moreover, the weakness in the broader market also dampened investor sentiments.
S&P lowered its long-term corporate credit rating on Tata Steel to 'BB-' from 'BB', adding that the outlook for the Mumbai-based firm is stable.
S&P also lowered its long-term corporate credit rating on Tata Steel UK Holdings to 'B+' from 'BB-' but maintained a stable outlook on the firm struggling with high debt and lower sales. The rating on Tata Steel UK has been lowered following the downgrade of its parent Tata Steel, the agency said.
"We downgraded Tata Steel because we expect the company's weak cash flows and compressed profitability to keep its leverage high over the next 12-18 months," S&P Credit Analyst Vishal Kulkarni said in a statement.
Meanwhile, the 30-share benchmark Sensex was trading at 24,751.35 points, lower by 102.17 points at 1141 hours.
