Sensex slumps over 600 points to fall below 66k mark

New Delhi, August 2 (IANS) The BSE Sensex plummeted more than 600 points on Wednesday morning to fall below the 66,000 mark.

Sensex was trading down 628 points at 65,830 points.

Twenty-seven stocks out of Sensex 30 were in the red, with NTPC and Tata Steel down more than 2 per cent.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. said the major news after market close yesterday is the rating agency Fitch’s downgrade of US sovereign rating from AAA to AA+.

This has impacted bond and currency markets with the US 10-year yield rising above 4 per cent. Paradoxically, during uncertainties dollar’s safe haven status improves even when when the downgrade is that of the US credit rating. This has happened in the past also, he said.

The impact on the stock markets is likely to be negative but not large since the US economy is now headed for a soft landing and not a recession, as markets feared earlier, he added.

US 10-year yield rising above 4 per cent and the dollar index appreciating to 102 are negative for emerging markets. Also, indicators like PMI from the Euro Zone and China suggest slowdown in these economies. In brief, the economic backdrop is negative. Investors may wait and watch for the dust to settle before jumping to buy on dips, he said.