Moody's Retains A Stable Outlook On India
DSIJ Intelligence / 27 Nov 2012
According to media reports, Sovereign Credit Rating Agency, Moody's, today said, that it is retaining its outlook on India as stable at the Baa3 level. This is partially due to the country's high savings and investments rates. Nonetheless, the rating agency stated that the challenges posed by the country's poor social and physical infrastructure, high government deficit and debt ratios, recurrent inflationary pressures and an uncertain operating environment pose headwinds toward improving the outlook further.
This move by Moody’s comes amid worries sounded out by various rating agencies over a period of time which called for caution particularly on the twin deficit front and lack of policy action. With the government putting an end to the policy paralysis D-street has witnessed some euphoric moves. This is evident from the front line Indices which have appreciated by almost seven per cent over the past three months.
The cabinet has approved most of the pending reforms and is now moving toward the final stage wherein the parliament needs to give it a go ahead. However, the initial four days of the Winter session of the Parliament saw a high drama and no action form North Block. According to reports, Parliamentary Affairs Minister Kamal Nath has said that allies of the ruling UPA Government are united in wanting a discussion on Foreign Direct Investment (FDI) in multi-brand retail and hence one should remain hopeful in the coming days on some of the pending reforms bills being passed.
The Rupee appreciated by 21 basis points to Rs 55.52 per US dollar following the announcement of the rating agency. Going ahead, there is every possibility that FII's will pump in money in the markets which will take it higher and in turn will also help the rupee to appreciate further against the dollar. From the medium term perspective, one may see a gradual decrease or decline in the cost of borrowing for Indian companies.
Other sovereign rating agencies are likely to review the rating on the Indian economy shortly taking a stand which could be on the same lines as that of Moody's. Spells some good times for the market.
This move by Moody’s comes amid worries sounded out by various rating agencies over a period of time which called for caution particularly on the twin deficit front and lack of policy action. With the government putting an end to the policy paralysis D-street has witnessed some euphoric moves. This is evident from the front line Indices which have appreciated by almost seven per cent over the past three months.
The cabinet has approved most of the pending reforms and is now moving toward the final stage wherein the parliament needs to give it a go ahead. However, the initial four days of the Winter session of the Parliament saw a high drama and no action form North Block. According to reports, Parliamentary Affairs Minister Kamal Nath has said that allies of the ruling UPA Government are united in wanting a discussion on Foreign Direct Investment (FDI) in multi-brand retail and hence one should remain hopeful in the coming days on some of the pending reforms bills being passed.
The Rupee appreciated by 21 basis points to Rs 55.52 per US dollar following the announcement of the rating agency. Going ahead, there is every possibility that FII's will pump in money in the markets which will take it higher and in turn will also help the rupee to appreciate further against the dollar. From the medium term perspective, one may see a gradual decrease or decline in the cost of borrowing for Indian companies.
Other sovereign rating agencies are likely to review the rating on the Indian economy shortly taking a stand which could be on the same lines as that of Moody's. Spells some good times for the market.
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