Published: Sun, November 19, 2017
Markets | By Noel Gibbs

Indian stocks surge on Moody's first upgrade in 14 years

Indian stocks surge on Moody's first upgrade in 14 years

Moody's Investors Service upgraded India's sovereign rating today to Baa2 from Baa3 with a stable outlook.

President of industry chamber Ficci Pankaj Patel said the development underlines the fact that India is moving in the right direction.

"Recognising India's continued progress under Hon'ble Narendra Modi ji Mo'dy's Investors Service has upgraded India's sovereign rating for the first time since 2004, citing the nat'on's economic and institutional reforms", tweeted Minister of State for Civil Aviation Jayant Sinha. "We don't think the other two global rating agencies - Fitch and S&P - will follow up in a hurry, based on their cautious rhetoric", she said, noting their concerns on "weak" state and central government finances.

At the same time, Moody's says India's high debt burden remains a constraint on the country's credit profile with the government's reform measures reducing the risk of a sharp increase in indebtedness. "We welcome it and believe that it is a belated recognition of all the positive steps taken in India in the last few years which has contributed to the strengthening of the Indian economy", he told reporters.

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Hailing the move, financial sector stalwarts too said it was long overdue and will reduce the borrowing cost for the country. Whether or not it prompts an upgrade by rating agencies should be a secondary consideration. The upgrading by the influential American credit rating agency comes after almost 13 years, during which time India has attracted cumulative foreign direct investment flows of about $ 250 billion and net portfolio investments of over $ 225 billion into its stock and debt markets.

Congress leader Kapil Sibal on Saturday said the upgradation of India's rating by U.S. credit rating agency Moody's was not in sync with the "mood of the people".

The rating action by Moody's became apparent right in the market's opening session that saw the BSE index shoot up 414 points at one point.

Anis Chakravarty, lead economist, Deloitte India, said Moody's rating upgrade "can be expected to bring buoyancy in equity and debt markets".

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The 50-share Nifty raced past the key 10,300-mark during the day, only to come off the high and end at 10,283.60, a gain of 68.85 points, or 0.67 per cent. Economic Affairs Secretary Subhash Chandra Garg said the upgrade has recognised Government efforts on fiscal deficit, consolidation and debt control.

"Fiscal prudence has helped India to get Moody's upgrade", the finance minister said.

Atul Pandey, Associate Partner, Khaitan and Co said the present government in last three years has carried out several economic regulatory reforms which has attracted more foreign investment and has also eased doing of business in India.

This is unedited, unformatted feed from the Press Trust of India wire.

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