Rising concern over economic slowdown, fiscal deficit, slump in manufacturing sector, liquidity shortage in system and delayed South-West monsoon combined with external issues such as tension building up in West Asia after Iran shot down an American military drone and no let-up in trade stand-off between United States and China weighed on equity benchmarks of Bombay Stock Exchange and National Stock Exchange today.

Dalal Street and other Asian markets traded with downside bias regardless of positive end to American stocks in overnight business in Wall Street. Analysts say American benchmarks Dow Jones, S&P500 and Nasdaq gained reacting to US Fed’s hint at cutting interest rate in July.

The Sensex closed for the week at 39,194.49 (-407.14) points, down 1.03 per cent. Nifty at 11,724.10 (-107.65) points lost 0.91 per cent. Nifty PSU Bank was the only index to end in green at 3,085.55 (+19.95) points up 0.65 per cent. In Sensex five stocks moved up and 25 down. For Nifty the ratio was 10:39:1.

Losers in BSE benchmark included Maruti at Rs 6,429.75, down 3.13 per cent; HDFC at Rs 2,140.80, down 2.64 per cent; HUL at Rs 1,769.60, down 1.99 per cent and RIL at Rs 1,279.30, down 1.36 per cent. The market was also spooked by reports of widening fiscal deficit in the coming Budget.

Dalal Street buzz suggest the government may have to put up with larger fiscal deficit due to significant shortfall in reveune. Analysts expect strong steps to check and punish evasion of Goods and Services Tax. The measures include matching of IT returns with GST payments, says market buzz.

The Reserve Bank of India Governor Shaktikanta Das also cautioned about economic slowdown at an event yesterday but at the same time did not ruled out yet one more cut in the central bank’s policy lending rate or repo rate which if effected in August will be fourth in a row. However, Dalal Street brokerages say slowdown is not limited to India citing central banks across the continents are gearing up to face the challenge of economic slowdown.

A sharp fall in sales of passenger and other vehicles is being cited as proof of not only economic slowdown but also drastic drop in consumption. Foreign brokerage UBS today drastically lowered the biggest car maker Maruti-Suzuki India’s rating from “buy” to “sell” and cut target price for the stock to Rs 5,800 from Rs 8,000. UBS mentioned 20 per cent decline in sales volume in April-May. Maruti-Suzuki in its guidance while releasing Q4 numbers had cautioned against further decline in sales. Analysts also pointed out 35 per cent decline in Tata Motors’ volume and 0.5 per cent in case of Mahindra and Mahindra. Industry sources partially blame current woes on liquidity crisis in NBFC or non-banking finance companies.

The auto segment has already been under stress on account of a rise in insurance cover and high fuel prices. In a related development, Moody’s Investors Service downgraded Tata Motors from Ba2 to Ba3. Both ratings are considered to carry speculative elements and also underline anti-credit risks. Moody’s cited sustained deterioration in the company’s credit profile on account of weak performance of its British arm Jaguar Land Rover or JLR. Today, auto and real estate stocks lost the most. Reliance Industries Limited, HDFC and Maruti Suzuki were the top losers in 30-share Sensitive Index of BSE and 50- stock Nifty of NSE.

Crude oil prices were also poised to end at a five-week high reacting to Iran-US tension.