Modi Proposes, Moody's accepts: Angel Broking

Views of Mr. Mayuresh Joshi (Fund Manager, Angel Broking):

"Global rating agency, Moody's upgraded India's sovereign rating by one notch from Baa3 to Baa2. The last rating upgrade was in 2004. This rating upgrade is critical because at Baa3, India's rating was just a tad above speculative grade which really did not reflect the growing importance of India in the global economic calculations. Incidentally, Moody's had upped the outlook for India in 2015 and the upgrade was actually more a question of when rather than whether?

The rating upgrade appears to have been triggered by 3 key factors. Firstly, the bank recapitalization is being seen as a major thrust for the Indian economy. Secondly, the government's commitment to fiscal discipline has also been a major positive for the Indian economy and its external strength. Lastly, the government has shown boldness in reforms by implementing GST and demonetization against all odds. According to Moody's, it reflects the commitment of the Modi government to the long term reforms process.

However, Moody's has also highlighted some key risks like the possibility of rising oil prices and an expanding fiscal deficit. But that is not to take away from the reforms undertaken. The markets are obviously pleased with the upgrade as is evident from the Nifty and the Sensex sharply higher in Friday trades. Bond yields are also expected to fall, which will be beneficial for banks."

Source : Equity Bulls

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