Moody’s Says India Better Positioned To Handle Future Global Shocks

Moody’s Ratings on Tuesday said India is better placed than several emerging market economies to manage future global shocks due to strong foreign exchange reserves, stable macroeconomic policies and deep domestic capital markets.

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In its latest report on emerging markets, Moody’s said India has remained one of the most resilient large emerging economies since 2020 despite multiple global disruptions.

The ratings agency said India’s strong reserve position and domestic funding base have supported stability during periods of external uncertainty.

“India’s reliance on domestic funding is balanced by deep local markets and sizeable reserves,” Moody’s said in the report.

The agency added that India’s monetary policy framework remains predictable and inflation expectations continue to remain anchored.

India Markets Performance

Indian equity markets have remained volatile in recent sessions amid rising crude oil prices and geopolitical tensions in West Asia.

On May 6, the Sensex closed 251.61 points lower at 77,017.79, while the Nifty ended down 86.50 points at 24,032.80.

Broader markets also witnessed pressure during the session. The Nifty Midcap and Smallcap indices traded lower alongside benchmark indices.

The rupee touched a fresh record low of 95.25 against the U.S. dollar during Tuesday’s trading session. Foreign Institutional Investors bought equities worth ₹2,835.62 crore on May 5, according to exchange data.

Moody’s On India’s Economic Position

Moody’s said India would enter future periods of global stress with strong financial buffers that could help maintain investor confidence.

The report added that India has managed external volatility through flexible exchange rate management and policy stability.

At the same time, Moody’s noted that India’s fiscal deficit and debt burden remain relatively high compared with some emerging market peers.

The report studied several emerging market economies, including India, Indonesia, Mexico, Malaysia, Thailand, Brazil, South Africa, Nigeria, Turkey and Argentina.

Global Stress Events Covered

According to Moody’s, the study reviewed the performance of emerging markets during major global disruptions since 2020.

These included the COVID-19 pandemic, the global inflation shock in 2022, the U.S. Federal Reserve’s interest rate tightening cycle, the regional banking stress in the U.S. during 2023 and renewed global tariff-related tensions in 2025.

Moody’s said several emerging economies were able to absorb external shocks during this period without facing major disruptions in capital market access.

The agency also said accommodative external financial conditions following recent global disruptions helped emerging markets manage funding pressures over the last five years.

India’s foreign exchange reserves, domestic investor participation and policy framework are expected to remain closely tracked by investors amid ongoing global volatility.