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Belying a promising start, the markets today fell for the second consecutive day and saw all its early gains go up in smoke as the benchmark BSE Sensex lost 47 points after Moody's slashed India's GDP forecast to 7 per cent.
Cautioning against growth risks, Moody's Investors Service today lowered its India growth forecast for this fiscal to 7 per cent from 7.5 per cent earlier, citing below-par rainfall.
The market performance was weighed down by heavy selling in blue-chips like HDFC, Lupin and Sun Pharma.
The monsoon deficit was another sticking point for investors, which widened to 10 per cent as El Nino phenomenon gathered steam.
A sharp correction in Chinese stocks amid concerns over the country's financial health gave bears an upper hand. The BSE metal index fell close to 2 per cent on fears that China's economy may be losing ground.
Reclaiming the 28,000-mark in early trade, the Sensex hit a high of 28,040.73, but failed to latch on to gains as it settled at 27,831.54, a fall of 46.73 points, or 0.17 per cent.
The 50-share NSE Nifty remained lacklustre too, which dropped 10.75 points, or 0.13 per cent, to close at 8,466.55.
"Domestic indices slipped after a positive opening on the back of a fall in the Chinese markets and on the news of Moody's reducing the country's GDP forecast," said Alex Mathews, Head, Research, Geojit BNP Paribas Financial Services.
The bear grip was in full display as 22 out of the 30-share Sensex pack ended in the red.
GAIL was the worst-hit, down 4.43 per cent, followed by Coal India and Cipla.
Tata Steel, Maruti Suzuki and Infosys were some of the bright spots though.
Sector-wise, the BSE metal index took the biggest blow, down 1.92 per cent, followed by healthcare, PSU and realty.
In broader markets, small-cap and mid-cap indices rose up to 0.85 per cent as investors widened bets.
Globally, Asian shares closed with losses, with the Shanghai index plunging 6.15 per cent, its biggest fall in 3 weeks.
European stocks were quoting lower in their early trade.
