Last Updated : Nov 17, 2017 08:39 PM IST | Source:

Moody's upgrades India's sovereign rating to Baa2; here’s how D-Street reacted

Moody’s said the decision to upgrade the rating was underpinned by the expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential.

Kshitij Anand @kshanand

Finally, the wait for a rating upgrade is over which the government has been fighting for quite some time in light of various structural policy measure which enhances India’s growth potential in the long term.

Rating upgrade would have a positive rub-off effect on equities, rupee, and bonds.

Earlier today, rating agency Moody’s Investor Services said that it is lifting India’s sovereign rating to Baa2 from Baa3.

It upgraded the Government of India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive, the rating agency said in a note on Friday.

Moody’s said the decision to upgrade the rating was underpinned by the expectation that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential.

We have collated reactions from various experts on D-Street:

Nilesh Shah, MD & CEO of Envision Capital

The rating upgrade does a lot more good for currency and bond markets. However, it does pull in a lot of fence-sitters who were waiting on the other side looking for an opportune time to enter the market here. So, it will certainly drive more liquidity into equities.

Vallabh Bhanshali, Chairman, Enam Securities

The symbolism of the move is a recognition of long term growth over short term which is very positive. However, while this will halt foreign money already in the country from exiting, fresh funds might still wait to get a better sense on GST implications and fiscal deficit roadmap.

Confident the risk of any downward pressure due to deterioration in banking system is done, and on things should get better from here.

Nilesh Shah, MD, Kotak Mahindra Asset Management

It’s a recognition of the steps taken by the governmentt – demonetisation, RBI mandate on inflation control, ease of doing business, tax base expansion due to GST. Most importantly, the rating upgrade has come at a time when crude prices are strengthening, and elections are due soon.

The upgrade opens up the country for investors who did not look at it earlier.

Vinit Bolinjkar, Head of Research at Ventura securities

Moody's upgrade will lead to improvement in the rating of sovereign bonds this reducing the cost of international borrowing. This will also mean slight cheaper borrowing costs for Indian corporates raising money overseas.

What's more important is it will boost confidence in India's economy and hasten further the already burgeoning investments on government paper and FDI.

This will also have a salutary effect on the stock markets. Markets should rally. It should also boost sentiment for the ruling party in the near term polls.

Ajay Bodke, CEO and chief portfolio manager, Prabhudas Lilladher

The rating upgrade will be viewed positively by the domestic market. It indicates that the international rating agencies are viewing country's macro economic management in a positive light.

Dinesh Rohira, Founder & CEO,

Extremely positive sets on the floor for 11000 and then the journey towards 12000 in the medium term. With rating upgrade and earning uptake in 1-2 quarters, GST benefits kicking in, the Indian economy has all it takes for the upmove.

Abhishek Goenka, Founder, and CEO of IFA Global

The upgrade was expected but the timing was a surprise. The Nifty should rally 200 points atleast and rupee should move one percent strong. Bonds also may be bought on account of flows expectation and may go to 6.8

Jimeet Modi, Founder & CEO, Samco Securities

The upgrade comes as a pleasant positive surprise. This should lead to some respite for the bond markets and should also strengthen the rupee in the short term.

Over the long term, it’s a great advantage since it leads to an overall reduction in the cost of funds and interest savings for the government.
First Published on Nov 17, 2017 08:44 am
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