Indian stock markets ran out of steam after a positive start
on Thursday amid profit taking and selloff in pharma stocks. The BSE Sensex,
which had jumped over 160 points in early trade following Moody's Investors
Service's surprise upgrade of India's credit outlook, slipped over 80 points,
while the 50-share Nifty traded below 8,700.
K Subramanyam of Altamount Capital expected investors to
take some profits off the table after four straight days of rally in domestic
equities. The Nifty had surged over 200 points in the last four days.
Earlier, the blue chip index had risen above the key 8,750
levels following Moody's Investors Service's surprise upgrade of India's credit
outlook from "stable" to "positive".
Analysts said the upgrade in outlook is a positive surprise;
it will raise investors' confidence in the Indian economy. Moody's upgrade will
also likely increase the momentum of foreign flows in the country. Inflows from
overseas investors in domestic debt and equity markets hit a record high of
over Rs 2.73 lakh crore in 2014-15 helping the Sensex clock its best gain since
2009-10.
"In terms of mood and sentiment, for debt and equity
markets, it's very positive... This will help international flows into
India," said SV Prasad of Chime Consulting.
The upgrade in outlook, however, will not have any bearing
on India's rating, which stays at Baa3, the lowest investment grade. S&P
and Fitch, the other major rating firms, also rate Indian credit at the lowest
investment grade, but they have a 'stable' outlook. Analysts expect other
rating firms to follow suit with an outlook upgrade in the coming months.
As of 09.55 a.m., the Sensex traded 76 points lower at
28,632 and the Nifty traded 30 points down at 8,685.
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