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Oct 10, 2012, 12.25 PM IST
Indian shares extended losses after the rating agency Standard & Poor's warning saying there is a significant chance of cutting credit rating of India in future. The Indian rupee, which was near to 51 last week, fell below the 53 against the US dollar now; it fell by 40 paise or 0.76 percent to 53.12 a dollar.
The S&P said there was a significant chance of cutting India credit rating in future. "Eurozone instability is still a risk to Asia-pacific sovereign ratings. Only Asia-pacific nations will see negative outlook post Eurozone instability. Political, economy, fiscal or external factors may lead to downgrade," the rating agency explained.
A day before yesterday, the International Monetary Fund has cut India's growth forecast to 4.9 percent for 2012 from 6.1 percent earlier.
Industrial output for August will be announced on Friday. The Index of Industrial Production growth dipped to 0.1 percent in July, as compared to 3.7 percent in the same month last year.
Since the announcement of reforms by the government on September 12, the market rallied 9 percent, which was largely due to strong inflow of foreign money. Experts feel the foreign inflow has been the driver for Indian markets after the co-ordinated action by Fed, ECB and China last month. But the fundamental of India has not changed yet, even after the announcement of various reforms to revive sluggish economy, experts say.
Country's largest lender State Bank of India tumbled 1.7 percent while its rivals ICICI Bank and HDFC Bank declined over 1 percent.
State-run power equipment maker BHEL extended losses to 2.5 percent while engineering conglomerate Larsen & Toubro was down 1.4 percent.
Infosys, India's second largest software services exporter fell 1.2 percent ahead of second quarter results that scheduled to be announced on Friday.
About three shares declined for every share advancing on the National Stock Exchange.
The BSE Sensex erased previous day's gains in early trade on Wednesday following weakness in global markets amid sluggish economic growth and concerns over Eurozone.
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