Sensex falls 330 pts on Moody’s outlook cut

Equity benchmark BSE Sensex tumbled 330 points on Friday as investors pressed the exit button after Moody’s cut India’s credit rating outlook citing growth concerns.

Profit-booking following the recent record-setting run and unease over valuations also took their toll, analysts said.

Trading on a weak note through the day, the Sensex briefly turned positive to hit a fresh intra-day high of 40,749.33, but failed to sustain the momentum. It finally ended 330.13 points, or 0.81% lower at 40,323.61.

The broader NSE Nifty plunged 103.90 points, or 0.86%, to end at 11,908.15.

Moody’s Investors Service cut country’s credit rating outlook to negative, the first step towards a downgrade, saying the government has been partly ineffective in addressing economic weakness, leading to rising risks that growth will remain lower.

The Indian rupee depreciated 33 paise to 71.30 against the US dollar intra-day.

“Rating downgrade forced investors to book profit in a volatile market and rupee weakened to three-week low. Given the subdued performance of the equity market during the year, MF (mutual fund) inflows fell to fourmonth low while premium valuation of large and blue-chips is not attracting new funds in the market,” said Vinod Nair, head of research, Geojit Financial Services.

Meanwhile, MSCI, the world’s biggest index compiler, has added eight Indian stocks including HDFC Asset Management Co.

Ltd, Info Edge (India) Ltd and Indraprastha Gas Ltd to its India Index, while removing Vodafone Idea, Yes Bank, BHEL, Glenmark Pharmaceuticals, Indiabulls Housing Finance Ltd and L&T Finance Holdings Ltd.

SENSEX WAS BRIEFLY POSITIVE AND TOUCHED A NEW INTRA-DAY HIGH OF 40,749 BEFORE PARING GAINS TO END 330 POINTS LOWER