Benchmark share indices ended lower on Wednesday, amid a report by Standard & Poor which lowered India's credit rating to negative from stable, weighed down by profit booking in software majors TCS and Wipro.
The report said that investment and economic growth slowed, current account deficit widened and expects government to face headwinds in implementing policy measures.
The 30-share Sensex ended down 56 points at 17,151 and the 50-share Nifty ended down 21 points at 5,201.
"For now, the markets are reacting negatively with USD/INR and INR-OIS moving higher and stocks lower.
"However, note that it is only a rating outlook change and not a rating change for now.
"Also as far as bond investments are considered, the limited foreign ownership of Indian bonds will help check the rise in yields because of the change in outlook," said Kumar Rachapudi, fixed income strategist, Barclays capital, Singapore.
During the day, the BSE benchmark index touched the day's high at 17,250 and the day's low at 17,019.
On the global front, Japan's Nikkei share average climbed 1% to snap four straight days of losses, boosted by decent US corporate results and an easing yen, though appetite for risk was tempered by political uncertainty in Europe and ahead of key central bank meetings.
The Shanghai Composite index advanced 0.75% while the Hang Seng index ended lower by 0.15%
Meanwhile, European markets are broadly
higher today with shares in France leading the region.
At 1540 hours, the CAC 40 was up 1.64% while Germany's DAX was up 1.30% and London's FTSE 100 was up 0.09%.
Back home, among the software shares Wipro was down 7%, TCS slipped 2% after recent gains post fourth quarter earnings while Infosys traded marginally higher by 0.01%.
Wipro Ltd, India's third-largest software services exporter, reported a 1.7% rise in quarterly net profit at Rs 1,481 crore for the quarter ended 31 March 2012.
The net profit stood at Rs 1,456 crore a quarter ago for the IT giant, which counts Citigroup Inc and Telenor ASA among its clients.
The soap to software major reported a growth of 8% when compared to the corresponding period last year. Wipro and TCS, together, accounted for a 40-point loss on the Sensex.
BSE Consumer Durable index plummeted by almost 2%. From the space, Titan Industiress, C Mahendra Exports, Gitanjali Gems and Whirlpool of India declined between 2-3% each.
Among the Sensex 30 stocks, Bharti Airtel was the top Sensex gainer, up over 2% at Rs 313.
Further, telecom stocks remained in focus today as the regulator proposed a 10-fold increase in the reserve price for spectrum over what operators had paid in 2008.
Other notable gainers included Hero MotoCorp, Sterlite Industries, Maruti Suzuki and HDFC Bank, up 1-2% each.
The losers from the space were Wipro, Gail (India), BHEL, TCS and Coal India, down 2-7% each.
Market breadth on the BSE was rather unhealthy with 1,436 stocks having declined against 973 advancing ones, on the BSE.