Indian benchmark indices Sensex and Nifty fell in early trade on Monday dragged by defensive sector stocks, which fell as investors continue to bet on the government's reform measures and the U.S. Federal Reserve's new asset purchase programme, to favour beaten-down and high-beta stocks.
At 10.41 a.m., the 50-share NSE Nifty was at 5,683.00, down 8.15 points, while the 30-share BSE Sensex traded 44.50 points lower at 18,708.33.
The markets had opened with marginal gains but quickly headed into the red after news that S&P had downgraded India's growth forecast to 5.5 per cent.
Cigarette maker ITC fell 1.7 per cent, while Hindustan Unilever was down 2.1 per cent in early trade Monday.
Larsen & Toubro too was down 1.1 per cent after Goldman Sachs downgraded the stock to 'neutral' from 'buy', saying it was trading above historical median valuations even as the macro-economic environment remained tough.
Index heavyweight Reliance Industries, TCS, ICICI Bank and Tata Motors too fell 0.5-1 per cent.
Meanwhile, power sector lenders Power Finance Corp and Rural Electrification Corp are up 2-3 per cent on hopes of restructuring of loans for State Electricity Boards. State Bank of India, Bharti Airtel and utility vehicle maker M&M gained about 1 per cent.
The rupee, meanwhile, continued its gaining streak against the dollar, inching closer to 53 levels on dollar selling by exporters. At 9:25 a.m., the Indian currency was trading at 53.16 to the dollar, up 0.53 per cent, or 28 paise, from Friday's close of 53.45.
Asian stock markets traded lower on Monday, dragged down by a fall in risk assets as investors shifted their focus to weak economic fundamentals while monitoring progress in the euro zone debt bailout scheme. The MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7 per cent, with a 1.5 per cent drop in its materials sector leading the declines.
With inputs from PTI, Thomson Reuters
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