Market players used S&P report for profit booking
Stocks were rallying until the market was hit by an S&P warning report. Fact is, the S&P report was available since 8th June. It was used as an excuse by market players to book profits, thus ending the longest run of the markets since January
Indian stock markets, which were rallying till late afternoon today, used the Standard & Poor's (S&P) report in the afternoon trade, mostly to book profits. The BSE Sensex, which had gained 754 points in the last five straight sessions, opened higher in the morning and advanced 175 points to touch a day's high of 16,893.
However, citing a report from S&P which said slowing GDP growth and political roadblocks to economic policy-making are some worrying factors for India, market players started booking profits in the afternoon trade resulting in markets ending below its last closing.
Surprisingly, S&P's report titled “Will India Be The First BRIC Fallen Angel?” was there on the ratings agency's website since 8th June, and yet Indian market started losing its gaining streak only after the media release in the country. According to sources, the report was accessible only for paid subscribers of S&P. The subscription ranges from $100 to $500. However, it seems that not a single media house in India is subscribed to these reports; otherwise, they would have given a “breaking news” on 8th June itself. In any case, institutional investors subscribe to such reports and after all, they are the ones who move the market.
S&P’s latest warning came less than two months after it cut India's credit rating outlook to ‘negative’ from ‘stable’ due to the country's lower GDP growth prospects and the risk of erosion of its external liquidity and fiscal flexibility.
Earlier in the day finance minister Pranab Mukherjee said 2012-13 would be the turnaround year for the economy. Highlighting the positives in the economy, Mr Mukherjee said interest rate cycle has been reversed and there is growth in mining sector, turnaround in investment growth rate and there are predictions of normal monsoon, besides decline in crude oil prices. “All these factors should help in recovery of domestic growth momentum,” he said.
Coming back to the stock market, last week it closed with a gain of about 5%, its longest gaining spree since January this year. Last week the Sensex jumped 754 points to settle at 16,719 and the Nifty climbed 227 points at 5,068.
On Monday, the Sensex rose by over 164 points in the early trade on increased buying by funds and retail investors, supported by recovery in the rupee and a firming trend in Asian markets. The wide-based National Stock Exchange index Nifty moved up by 47 points or 0.93% to 5,115.40 in early trade.
Asian shares rose today after finance ministers of the Eurozone nations, in a emergency conference call last week, agreed to lend Spain up to 100 billion euros to stabilise its banks, relieving markets that had feared for the country's fiscal collapse.
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