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

Moody's Upgrades India's Ratings; Amit Shah Pats Modi's Back

Moody's Upgrades India's Ratings; Amit Shah Pats Modi's Back

Along with that, Moody's Investors Service also upgraded nine state-owned companies including ONGC, IOC, HPCL, NTPC and GAIL and four financial institutions including SBI and HDFC and EXIM Bank.

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

Shah says from a flow point of you Moody's upgrades provides a a great opportunity for India because there are many pensions funds that don't invest in India because of lower rating.

The 30-share BSE Sensex gained 235.98 points or 0.71 percent at 33,342.80 and the 50-share NSE Nifty rose 68.80 points or 0.67 percent to 10,283.60.

Congress leader Kapil Sibal on Saturday said the upgradation of India's rating by USA credit rating agency Moody's was not in sync with the "mood of the people". Ratings changes are very slow, infrequent and at most times move with a lag to market expectations, he said. "While a number of reforms remain at the design phase, Moody's believes that those implemented to date will advance the government's objective of improving business climate, enhancing productivity, stimulating investment, and ultimately fostering strong and sustainable growth", it added. "This comes amidst slew of global recognitions", he said in a tweet.

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Overall inflation rate in the country has declined markedly in recent times and forex reserves have increased to all-time highs, creating significant policy buffers to absorb potential shocks, Moody's said.

Global rating agency Moody's has improved India's sovereign rating for the first time since 2004, citing state reforms to further enhance the economy's capacity to absorb shocks.

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. "Due to ratings upgrade will help in reducing our costs of crude oil imports on the other", Mukesh Kumar Surana, chairman and managing director Hindustan Petroleum Corporation Limited told The Hindu. Moody's cautioned that a material deterioration in fiscal metrics and the outlook for general Government fiscal consolidation would put negative pressure on the rating.The rating could also face downward pressure if the health of the banking system deteriorates significantly or external vulnerability increases sharply.

Moody's pegged GDP growth at 6.7 per cent in FY18 and 7.5 per cent in FY19, with similarly robust levels of growth from FY20.

The government and the Finance Ministry had been seeking an upgrade for the past few years, citing the high economic growth and improved fiscal deficit. Earlier, the outlook was positive but on a lower rating, which indicated there were more chances of an upgrade than downgrade.

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