Sensex tanks 1,500 points in 2 days. Should you ditch Fitch to buy stocks?

economictimes.indiatimes.com:

Fitch's move to downgrade US rating as an excuse to book some profits off the table. Sensex has plunged about 1,500 points in 2 days while Nifty broke below the 19,300-zone. In the two-day selloff, investors have become poorer by Rs 5.7 lakh crore. While Fitch's statement had nothing new to offer as it is a well-known fact that developed market governments are getting more indebted, the downgrade of US rating to AA+ from AAA is seen as being sentimentally negative for riskier assets. In sync with the risk-off reaction in global and other Asian markets, Sensex plunged over 800 points on Thursday with Reliance Industries (RIL), banks and IT stocks leading the downside. Realty, banks and other financial stocks were among the worst affected but pharma stocks managed to thrive in the selling pressure on the back of Q1 earnings report card. Amid the global sell-off, Dalal Street traders also overlooked Morgan Stanley's upgrading of Indian equities to overweight position. Citing a structural uptrend, secular leadership and relative valuations being less extreme than in October, the global brokerage firm has placed India at the No.1 position in its basket of Asian emerging markets ex-Japan.

Analysts say that the fundamental factors driving the rally in global markets will not get upset as a result of the Fitch downgrade. «The US economy’s soft landing narrative, which is driving the ongoing global rally, is intact and getting stronger. GDP growth in the US is strong and inflation is coming down. 80% of US companies have posted better-than-expected quarterly results. The Fitch downgrade doesn’t alter this significant macro construct. The sentimental impact of the rating downgrade is likely to fade away