Benchmark shares indices ended their five-day winning streak erasing intra-day day's gains after global rating agency Standard & Poor's today said India may become the first BRIC country to lose the investment grade rating.
Slowing GDP growth and political roadblocks to economic policy making are just some of the factors pushing up the risk that India's (unsolicited BBB-/Negative/A-3) could lose its investment-grade rating.
That's according to a recently released report by Standard & Poor's Ratings Services, titled "Will India Be The First Bric Fallen Angel?"
The report states that the Indian government's reaction to potentially slower growth and greater vulnerability to economic shocks could largely determine whether the country can maintain an investment-grade rating or become the first "fallen angel" among the Bric nations.
The BSE benchmark index- Sensex fell 226 points from the day's high level to close at 16,668 and the 50-share Nifty slipped 56 points from the highs to shut shop at 5,068.
In intra-day deals the Nifty crossed above the crucial psychological 5,100 and registered a high of 5,124.
The European markets were trading on a strong note after the Eurozone finance ministers decided to grant a 100 billion euro bailout to struggling Spanish banks.
Following this development, Spain's IBEX index surged 2.6% to 6,725 levels. CAC40 index, DAX and FTSE 100 were also trading higher by 1-2% each.
The Asian markets also ended higher in trades today following the bailout for Spanish banks.
The Hang Seng advanced 2.4% or 451 points at 18,954, Nikkei advanced 165 points to 8,624 and the Kospi ended higher by 31 points at 1,867 levels.
Reliance Industries ended down 1% on profit booking after recent gains post the company's AGM. Capital goods majors which gained sharply last week after the government's intent to revive the infrastructure space also witnessed profit taking at higher levels.
L&T ended down 2% at Rs 1,283 after rising over 15% last week while BHEL ended down 2.2% at Rs 216.
Auto stocks which had gained last week on hopes of a rate but by the RBI at its June 18 policy meet also ended lower today. Tata Motors, Hero MotoCorp, Maruti Suzuki and Mahindra & Mahindra ended over 1% down each.
On the other hand, Tata Power was the top gainer. The stock closed higher by 2.2% at Rs 96 on report that the government will allow to raise tariffs by up to Re 1 per unit for power projects using imported coal to offset the effect of increase in fuel price due to additional taxes or changes in law by the governments of source countries.
Shares of other power generation companies were also trading higher by 4% each. Sterlite Industries gained 1% to end at Rs 101, extending its Friday's 3.5% gain on reports that a unit of the company has entered into a tripartite agreement with Larsen & Toubro and its partner Dubai Aluminium Company (Dubal) to buy them out from their aluminium venture in Odisha, called Raykal Aluminium.
Bajaj Auto, Hindustan Unilever, Gail India, Coal India, TCS, Infosys and Bharti Airtel were also among the notable gainers.
Among the individual stocks, Indraprastha Gas Limited (IGL) surged 2% to Rs 230 after the company said HDFC Standard Life Insurance has acquired more than 1% stake through open market transaction on June 1, a day when the stock rallied over 28%, post Delhi High Court order in favour of the company.
BEML ended 2.5% lower after company chairman and managing director V R S Natarajan was suspended by the Defence Ministry on a CBI recommendation to ensure fair investigation in several cases, including the probe in the controversial Tatra truck deal.
Ashok Leyland ended higher by nearly 2% at Rs 27 on the Bombay Stock Exchange (BSE) after it announced the completion of an export order for buses worth $7.6 million.
The braoder markets ended on a listless note.
The BSE mid-cap index slipped 12 points to 5,976 and the small-cap index ended flat at 6,339.
The overall breadth was marginally positive as 1,447 stocks advanced while 1,260 stocks declined.