Sensex Jumps 235 Points After Moody's Upgrade; Nifty Ends At 10283

Randall Padilla
November 19, 2017

Moody's has assigned a stable outlook to SBI's DIFC branch.

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

"The decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term", a Moody's Investor Service release said. "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.

The global rating firm also backed the reforms undertaken the Modi government saying; "Moody's believes that those (reforms) implemented to date will advance the government's objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth. Took more than a decade but is a big positive development for the Indian economy", he said in a tweet.

"It clearly shows that the economy is turning the corner and poised for a big leap forward, highlighting the vast potential that India offers as a global investment destination", he said. All Indian markets including stocks, bonds and rupee rallied on the ratings upgrade.

In his comment, Bank of America Merrill Lynch (BofAML) Economist and Co-Head of India Research Indranil Sen Gupta said the rating upgrade supports its call that risks in India's government securities (G-sec) markets are overdone.

Yesterday, for the first time in last 14 years, they have upgraded India's credit rating, and this is indeed big news.

Moody's expects real GDP growth to moderate to 6.7% in the fiscal year ending in March 2018 (FY2017), but said in the longer term India's growth potential is significantly higher than most other Baa-rated sovereigns.

The benchmark BSE Sensex hit as high as 33,520.82 before paring gains to end the session up 235.98 points or 0.71 percent at 33,342.80.

India's economic growth had slipped to an over three-year low of 5.7 per cent in the first quarter.

Rana Kapoor, MD and CEO Yes Bank, said the long overdue sovereign rating upgrade for India is an endorsement of institutional and structural transformations ushered in by the government in the last few years while maintaining fiscal prudence.

"The intent of Modi government is to continue with its reform agenda", he said.

The rating upgrade comes after a gap of 13 years.

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

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