Sensex Tumbles at Midsession on S&P Downgrading Outlook

Mumbai: Erasing initial gains, the BSE Sensex fell 188 points at midsession, due to profit booking sparked off by reports of Standard & Poor's downgrading India's rating outlook to negative. The Sensex, which had climbed to 17,249.61 at the outset, fell back to trade lower by 188.05 points to 17,019.24 at 1300 hrs, following steep fall in stocks of realty and IT sectors. Similarly, the broad-based National Stock Exchange index Nifty lost 62 points to 5,160.65. Selling pressure emerged as S&P cut the country rating outlook to negative from stable. It also warned of a downgrade in two years if there is no improvement in the fiscal situation and the political climate continues to worsen. The lowering of outlook from stable (BBB+) to negative (BBB-) is expected to make external commercial borrowings expensive for Indian Inc. All the sectoral indices fell up to 1.77 percent lead by realty, consumer durable and information technologies. The BSE Sensex is flat as bargain hunting lifts Reliance Industries and Bharti Airtel, but Wipro drops after issuing a muted outlook. Bharti stocks lost 5.2 percent in last two sessions on a regulatory body proposal to sharply increase the price of basic mobile phone spectrum. Reliance Industries has fallen about 11 percent since the end of February. Wipro's stock falls 6.5 percent after issuing a muted revenue growth forecast for its key IT services unit for fiscal quarter ending in June. The BSE benchmark index Sensex on Wednesday declined by over 32 points in early trade, as funds and retail investors booked profits afterTuesday's gains. The 30-share index, which had gained 110.61 points on Tuesday, fell by 32.56 points, or 0.18 percent, to 17,174.73, with stocks of IT, capital goods, auto and realty sectors succumbing to profit-booking. Similarly, the wide-based National Stock Exchange index Nifty shed 11.20 points, or 0.21 percent, to 5,211.45. Brokers said profit-booking by speculators after Tuesday's gains led to the fall in select stock prices. In addition, a cautious approach adopted by participants ahead of tomorrow's monthly expiry in the derivatives segments also influenced the trading sentiment, they added. In the Asian region, Hong Kong's Hang Seng index rose by 0.08 percent, while Japan's Nikkei Index gained 0.94 percent in morning trade. The US Dow Jones Industrial Average ended 0.58 percent higher on Tuesday.