Nifty 17110.15 (-0.97%)
Sensex 57276.94 (-1.00%)
Nifty Bank 37982.1 (0.73%)
Nifty IT 33475.05 (-3.55%)
Nifty Financial Services 17763.15 (-0.15%)
Adani Ports 709.10 (-0.28%)
Asian Paints 3116.95 (-0.96%)
Axis Bank 773.85 (2.88%)
B P C L 382.20 (-0.09%)
Bajaj Auto 3501.10 (0.92%)
Bajaj Finance 6837.00 (-1.82%)
Bajaj Finserv 15359.85 (-1.09%)
Bharti Airtel 707.25 (-0.65%)
Britannia Inds. 3494.15 (-1.28%)
Cipla 927.60 (2.42%)
Coal India 160.55 (-0.37%)
Divis Lab. 3939.85 (-2.70%)
Dr Reddys Labs 4256.35 (-3.33%)
Eicher Motors 2643.85 (-1.79%)
Grasim Inds 1687.05 (-1.99%)
H D F C 2503.35 (-1.08%)
HCL Technologies 1077.75 (-4.09%)
HDFC Bank 1474.95 (-0.88%)
HDFC Life Insur. 621.50 (-1.47%)
Hero Motocorp 2715.00 (-2.41%)
Hind. Unilever 2295.35 (-1.37%)
Hindalco Inds. 489.15 (0.70%)
I O C L 122.70 (1.03%)
ICICI Bank 794.65 (-0.87%)
IndusInd Bank 888.10 (0.44%)
Infosys 1678.60 (-2.53%)
ITC 214.60 (0.14%)
JSW Steel 626.10 (-0.80%)
Kotak Mah. Bank 1889.25 (1.87%)
Larsen & Toubro 1910.85 (-0.75%)
M & M 858.05 (0.42%)
Maruti Suzuki 8820.20 (2.53%)
Nestle India 18385.45 (-2.16%)
NTPC 135.00 (-0.22%)
O N G C 165.70 (0.33%)
Power Grid Corpn 214.85 (-1.83%)
Reliance Industr 2338.10 (-1.48%)
SBI Life Insuran 1211.65 (-1.33%)
Shree Cement 23961.80 (-2.19%)
St Bk of India 528.95 (2.78%)
Sun Pharma.Inds. 812.10 (0.50%)
Tata Consumer 705.95 (-0.25%)
Tata Motors 494.40 (0.78%)
Tata Steel 1088.35 (-1.87%)
TCS 3649.25 (-3.20%)
Tech Mahindra 1445.60 (-3.67%)
Titan Company 2310.05 (-2.80%)
UltraTech Cem. 7100.70 (0.03%)
UPL 771.95 (-2.43%)
Wipro 544.75 (-3.19%)

Moody’s Upgrades India’s Rating Outlook to “Stable”

Moody’s Upgrades India’s Rating Outlook to “Stable”
News - Updates
by 5paisa Research Team 06/10/2021

On 05th October, Moody’s raised India’s sovereign rating outlook from “Negative” to “Stable”. However, the sovereign rating for India’s local and foreign currency debt was maintained at Baa3. It may be recollected that at the peak of the pandemic in May 2020, Moody’s had downgraded India’s sovereign rating from Baa2 to Baa3 with negative outlook.

Just to give a perspective, India’s ratings continue to be below the pre-2020 levels. The current rating of Baa3 is the lowest investment grade rating assigned by Moody’s and even one notch below this level would put India in speculative category. Among other major countries in the Baa3 category are Italy and Russia.

One of the big reasons for this outlook upgrade was that the vicious cycle created by the pandemic was abating in India. During the pandemic, the weak real economy was hitting the financial markets, which was in turn hitting the real economy. According to Moody’s India appears to have broken out of that vicious cycle for now.

Among the 3 major global rating agencies, now Moody’s and S&P have placed India in the low investment grade with stable outlook. However, Fitch continues to position India in the low investment grade category with negative outlook. By upgrading the outlook to stable, Moody’s gives additional buffer to India as protection against downgrade to speculative.

Moody’s has been Impressed specifically by the sharp bounce in GDP, despite the pandemic. Moody’s underlined that the aggressive vaccination program that had inoculated more than 90 crore Indians was largely instrumental in making India less vulnerable to any resurgence of delta variants. The current account moving from deficit to surplus was also positive.

Moody’s has raised some pertinent concerns too.

i) Per Capita income at under $2,000 in absolute terms and $6,400 in PPP terms is much lower than the peer group.

ii) Moody’s also pointed that the fiscal deficit levels at 9.5% and 6.8% were too high for comfort. The combined deficit at 13.5% was another dampener.

iii) One area of concern was the spike in debt levels with average debt levels surging in 2021 to well above the peer group median.

iv) Moody’s also appreciated the role of the government and the RBI in helping India spend its way out of trouble, but insisted on continued reforms.

As Moody’s summed it up, India has never defaulted on any debt in the last 38 years. That should put investors in comfort zone.

About the Author

Open Demat Account

Enter Mobile Number
Enter correct otp
Start investing in just 5 mins
Free Demat account, No conditions apply
  • 0%* Brokerage
  • Flat ₹20 per order
SENSEX
57,276.94
-581.21 (-1.00%)
Nifty 50
17,110.15
-167.80 (-0.97%)
Nifty Bank
37,982.10
275.35 (0.73%)
Next Article

Start Investing Now!

Open Free Demat Account in 5 mins

Enter Valid Mobile Number

Stocks Directory

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z All 0-9