INSUBCONTINENT EXCLUSIVE:
NEW DELHI: India’s benchmark equity indices on Friday did not react to the change in Moody's India outlook to ‘negative’ from
Analysts said market participants felt the economy has hit the bottom already and that is in the price.
Economists, though, believe the
economic recovery process could take more time than initially thought.
Moody’s said its ‘negative’ outlook partly reflects lower
effectiveness of government and policy in addressing long-standing economic and institutional weaknesses than it had previously estimated
This is leading to a gradual rise in debt burden from already high levels, it said
Moody’s was the only rating agency to have upgraded India’s ratings in November 2017
Many economists were surprised then, as the upgrade was made despite acute pressure on revenues following GST implementation.
“Rating
agencies do their job a little later, a little slower, but markets are ahead
Ratings agencies look into the rear-view mirror
I think that is the fundamental difference,” said Srinivasan Subramanian of Axis Capital.
“I am not downplaying the gravity of the
But the market is looking positive because the government is responding at multiple levels across the entire spectrum
It may take a couple of quarters for the measures to show their effects
But when the rating agency is talking about today, markets are talking about tomorrow,” he said.
Sandip Sabharwal of
asksandipsabharwal.com in a tweet called the outlook ‘ridiculous’
He said the government compromised growth in trying to keep the rating agencies happy all this while.
That excessive focus on fiscal deficit
is one of reasons behind slower growth, he said
They see nothing wrong in euro economies
Today, they have downgraded India Outlook on short-term growth concerns,” he said.
The BSE Sensex shed just 69 points, 0.17 per cent, to
trade at 40,584 after hitting a record high of 40,688 on Thursday.
Economists do believe the ongoing slowdown is here to stay for some time
“We do agree with Moody’s underlying economic assessment
While there are tailwinds in the form of counter-cyclical macro policies and the government's continued commitment to reforms, the triple
balance sheet problem has tightened credit conditions, hindered policy transmission, prolonged the balance sheet deleveraging process and
constrained investment,” Sonal Varma of Nomura India said in a note.
In a separate note, the foreign brokerage said an acceleration in
earnings downgrades amid re-rating of market multiples should lead to muted upside at an overall market level
The brokerage pegged its year-end Nifty target at 12,545.
The Finance Ministry reacted to Moody’s downgrade, saying India still is among
the world’s fastest-growing economies.
It said the government has undertaken a series of financial reforms to strengthen the economy as a
The government has also proactively taken policy decisions in response to the global slowdown, it said
