Mumbai: The BSE Sensex and NSE Nifty erased gains after rating agency Standard & Poors' says India may become the first country among BRIC (Brazil, Russia, India and China) to lose investment grade rating.
The BSE benchmark fell 50.86 points or 0.30, to close at 16668.01 on Monday. Meanwhile, the NSE benchmark fell 14.25 points or 0.28 to close at 5054.10.
Even the Indian rupee depreciated 19 paise to 55.61 as against the US dollar. It had appreciated by around 30 paise at one point of time on Monday.
Private sector lender ICICI Bank jumped 1.5 per cent while rivals State Bank of India and HDFC Bank were up 1 per cent each.
According to recently released report by Standard & Poor's Ratings Services, titled "Will India Be The First BRIC Fallen Angel?", 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 (which also comprise Brazil, Russia, and China). The 'BBB-' long-term sovereign credit rating on India is currently one notch above speculative grade.
"Setbacks or reversals in India's path toward a more liberal economy could hurt its long-term growth prospects and, therefore, its credit quality," said Standard & Poor's credit analyst Joydeep Mukerji.
Oil & gas producers Reliance Industries and ONGC were down 0.7 per cent and 1.6 per cent, respectively.
Capital goods majors Larsen & Toubro and BHEL too were under pressure, losing over 0.6 per cent.
Even healthcare sector (defensive sector) lost ground. Sun Pharma, Cipla and Dr Reddy's Labs dropped 1-2 per cent.
Auto stocks turned negative; Hero Motocorp, M&M and Maruti Suzuki were marginally lower. Top commercial vehicle maker Tata Motors was flat.
However, private sector lenders HDFC Bank and ICICI Bank were up 1 per cent and 0.6 per cent, respectively while rival State Bank of India rose just 0.3 per cent.
Shares of Sterlite Industries, Tata Power, Coal India and GAIL shot up 2-3 per cent.
FMCG major HUL rallied 1.5 per cent. Housing finance company HDFC, top telecom operator Bharti and software services exporter TCS were marginally higher.