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 BSE Sensex was down 123 points in trade on Thursday morning as the market absorbed the impact of the US downgrade.

Sensex was trading at 65,659 points after a steep fall on Wednesday.

Titan led the Sensex losses down almost 3 per cent.

V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services said often stock markets are impacted by unexpected events. When market valuations are high, the sell off will be sharp. This was what happened in global markets after the Fitch downgrade of the US credit rating.

The US economy’s soft landing narrative, that is driving the ongoing global rally, is intact and getting stronger. GDP growth in the US is strong and inflation is coming down. 80 per cent of the 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 soon, he said.

The valuations in India continue to be rich from the short-term perspective, but fair for long-term investors. Weakness in the market may be used to slowly accumulate high quality stocks which have corrected. Leading stocks in banking, capital goods and construction-related segments look good for long-term investment, he said.