Sensex ends at one-week low but IT stocks gain on weak rupee

The Indian equity markets fell for a third consecutive day with the BSE Sensex ending at fresh one-week low of 20,822.77, down 72.17 points or 0.35 percent lower while the Nifty ended 27 points lower at 6187 after rating agency Standard & Poor’s said it may cut India’s sovereign rating to below investment grade should the next government fail to provide a credible plan to reverse the country’s low economic growth.

However, IT stocks gained today as the rupee depreciated further to trade at 62.50 against the USD.

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Tata Steel Ltd gained 4.4 percent after global rival ArcelorMittal’s operating profit beat street estimates.That is raising hopes as Tata Steel gears up to report its earnings next week with traders betting on a better performance from its European subsidiary, Corus.

Top Sensex gainers were Tata Steel, Infosys, TCS, Hindalco and Bajaj Auto, while ICICI Bank, Tata Motors, SBI were the big losers.

In an interview to CNBC-TV18, Goldman Sachs Asia Strategist Timothy Moe said the market is viewing Narendra Modi as a leader for change and it is trading politics over fundamentals at this point. Moe based this assumption on the feedback his firm has been getting from its clients.

Moe does not see a big downside to the Indian market in near-term and feels that Indian market will not react severely when the Fed actually rolls back stimulus because external factors for India have moderated. He is overweight on IT, pharma and energy stocks and is underweight on consumer staples given its high valuations. The US based broking firm has also raised its outlook on cyclicals to equalweight from underweight.