Indian stock market continued their negative run in today's trading session. This was on account of lingering concerns about the Greek default. The indices opened with a cautions note. However towards the afternoon session selling pressure took over and sent the indices well below the dotted line. While the BSE-Sensex closed lower by around 287 points (down 1.8%), the NSE-Nifty closed lower by around 77 points (down 1.6%). The BSE Mid Cap and the BSE Small Cap were not spared either as they closed lower by 1.3% and 1.1% respectively. Losses were largely seen in banking and auto space. All indices closed lower for the day except for capital goods.
As regards global markets, Asian indices were deep in the red today while European indices also faced heavy selling pressure. The rupee was trading at Rs 49.24 to the dollar at the time of writing.
Global stocks fell to a 15 month low on account of fresh fears of a Greek default. This fueled fresh fears of a global recession and a slowdown. Banking shares were heavily battered, especially on account of concerns of their exposure to Europe debt. Investors sold their riskier assets, preferring to be invested in cash.
Banking stocks have closed the day deep in red with Allahabad Bank and State Bank of India (SBI) leading the losses. The stock of SBI witnessed bloodshed after major ratings agency, Moody's, decided to downgrade its rating for the bank. The bank's financial strength rating has been downgraded to D+ from C-. Moody's has stated that the main reasons for this are concerns over the bank's asset quality as well as its capital situation. In light of the increasing interest rates, there are fears that the bank may see its asset quality deteriorate. In addition to this, SBI's Tier 1 capital adequacy ratio (CAR) has hovered at levels lower than the mandatory 8% level. As at the end of June 2011, the Tier 1 CAR stood at 7.6%. SBI has plans for a Rs 230 bn rights issue which would help in increasing the ratio to 9.3%. However, as per Moody's this amount may prove to be inadequate considering the size of the bank.
National Aluminium Co Ltd (NALCO), India's 3rd largest aluminium company plans to invest US$ 4 bn in an aluminium smelter and power plant in Indonesia's East Kalimantan province. This smelter will have an annual capacity of 500,000 tonnes. Earlier in July NALCO, said it was in talks with an Indonesian state-run mining company called PT Antam for setting up a 500,000 tonne aluminum smelter and a 1,260 megawatts captive power plant. The stock closed lower for the day in an overall weak market.