Saturday, July 4, 2020

Indian shares cling to slim gains after ratings cut

International Business

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Indian shares clung to narrow gains on Tuesday as a surge in Kotak Mahindra Bank as well as retail and hotel stocks helped offset the broader impact of a ratings cut by Moody’s, citing slow economic growth.

The NSE Nifty 50 index was up 0.6% at 9,877.60 by 0514 GMT, while the S&P BSE Sensex rose 0.55 % to 33,481.77. The indexes had risen more than 1% earlier in the session.

Moody’s Investors Service downgraded India’s credit rating to a notch above junk, citing a prolonged period of slow growth, rising debt and persistent stress in parts of the financial system.

“Markets are trying to look ahead given the situation which is known from the fourth quarter results and outlook by companies. People are hoping for the reopening of the economy, which the market is trying to factor now,” said Vinod Nair, head of research, Geojit Financial Services Ltd.

Shares of Kotak Mahindra Bank Ltd rose as much as 8% after a report on Monday that promoter Uday Kotak will launch a 60 billion rupees block deal to meet Reserve Bank Of India regulations.

“With the offloading in Kotak shares the tussle between the Reserve Bank and promoters will go away and the floating stock will increase the weightage in indices,” said Saurabh Jain, assistant vice president of research at SMC Global Securities in New Delhi.

The bank’s shares were the top boost to the Nifty 50 index.

Shares in India’s retail and hotel chains also gained on Tuesday as the government prepared to further ease lockdown curbs from next week. Retailer Shoppers Stop soared nearly 20%.

Meanwhile, Asian stocks eked out gains as investors’ focus on the prospects of a global coronavirus recovery won out over familiar worries about Sino-U.S. relations and the depth of economic damage.