Some banks called the Moody's move backward looking, arbitrary and unwarranted.
Although, Moody's expects that global and domestic factors, including potential shocks in agriculture, could keep India's growth below trend for the next few quarters.
Moody's Investors Service has changed the outlook for the long-term foreign currency deposit ratings of a number of Indian banks -- currently rated Ba2 -- from 'negative' to 'stable' for India.
The revision was announced before Indian markets opened on Thursday.
The RBI said there is an upward bias on inflation projection.
The Modi administration has been unable to initiate key reforms.
Revision in the context of an ongoing global review affecting financial institutions: Moody's
Moody's Analytics had said Prime Minister Narendra Modi must keep BJP members in check or risk "losing domestic and global credibility".
Top losers in the Sensex pack included Sun Pharma, Vedanta, ONGC, TCS, HUL, ITC, NTPC, Asian Paints and Infosys, shedding up to 4.23 per cent.
The current episode highlights the structural vulnerabilities in the liquidity management practices of Indian NBFIs
'Modi must keep his members in check or risk losing domestic and global credibility,' Moody's warned.
Central bank Governor Raghuram Rajan drew kudos from Moody's Analytics for his monetary stance.
Top seeds Wesley Moodie and Rik de Voest of South Africa beat second seeds Rohan Bopanna and Aisam Qureshi 6-4, 7-6 (4) in the final of the US $50,000 ATP Challenger in New Delhi on Friday.
The ministry sought to allay the rating agency's concerns and said economic growth was on an upward swing.
Earlier this month, Parliament approved the Insolvency and Bankruptcy Code, 2016.
"The 2017 state election results in India demonstrate broad-based popular support for the Indian government's policy agenda and will facilitate the implementation of further reforms, a credit positive for the sovereign," Moody's said in a statement.
India may have to lean more on West Asian nations for supplies of liquefied petroleum gas (LPG), a cooking fuel, in the coming years after Indian state-run refiners drew up big plans to diversify into producing more profitable petrochemicals. This shift leads to reduced LPG output, Indian refining executives said. The mantra for state-run oil companies, from Indian Oil Corporation (IndianOil) to liquefied natural gas (LNG) importer Petronet LNG, which are looking to diversify their businesses from lower-margin fuels, has been value-added petrochemicals.
Moody's on Thursday said the new 'inflation targeting' mechanism is a "credit positive" move.
Despite the increased business risks, the rating agency affirmed Baa2 ratings, three notches down from the highest grade, with a stable outlook for RIL, Moody's Investor Service said in its weekly outlook.
Fitch Ratings on Tuesday raised India's growth forecast for the current fiscal to 7.2 per cent, from 7 per cent projected in March, saying elevated consumer confidence will drive spending, besides increased investments. In June update to its global economic outlook report, Fitch said it expects inflation to decline to 4.5 per cent by end of this year and RBI to cut policy interest rates by 25 basis points to 6.25 per cent.
Amid wholesale price-based inflation ticking up to 7.5 per cent year-on-year in May due to supply-side factors, the agency said it will cause further "headaches" at the RBI.
Earlier, ratings agencies like Standard and Poor's and Fitch had threated to downgrade India's sovereign credit rating to junk grade in view of the worsening fiscal position of the government.
Berkshire has reduced its stake as various regulatory inquiries and a slowdown in the business of rating lucrative structured bonds has taken a toll.
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The rupee had slumped to a record low of 59.9850 rupee to the dollar on Thursday, as the country's record high current account deficit is exacerbating its vulnerability in an emerging market rout.
Sunrisers Hyderabad coach Tom Moody has heaped praise on opener Parthiv Patel for playing a "mature innings", which laid the foundation for their 30-run win over Kings XI Punjab and improved their chances of reaching the IPL semi-final.
Moody's said implementation challenges, in addition to affecting growth and government revenues, will impact corporates by lowering sales volumes and cash flows.
Moody's said domestic growth will offset global headwinds.
Moody's had revised credit outlook of Germany to negative, raising the possibility of the economic major losing its coveted 'Aaa' rating amid worsening European debt turmoil.
International rating agency Moody's is likely to upgrade the rating of the country's leading private company Reliance Industries following improvement in its financial position.
The Indian doubles ace and the South African will team up at the Australian Open.
Moody's, which cut its FY14 growth estimate to 4.5 per cent recently, said economic growth will be lowest in a decade.
'We are pretty comfortable and to be honest with you, there is nothing we can do about what happened with David Warner. We have moved on from there'
The coach of Sunrisers Hyderabad Tom Moody is hoping for Yuvraj Singh's speedy recovery ahead of season nine of the Indian Premier League. The Hyderabad-based franchise made some smart picks in the 2016 IPL Player Auctions. But the biggest name that caught everyone's attention was Yuvraj. However, the senior all-rounder is recovering from an injury, that he sustained during the World T20 and is expected to miss out on the first two weeks of IPL. "A player like Yuvraj Singh is important to any team. He is not only a match-winner with the bat but he is a very useful bowler in those middle overs," Moody said. "Sadly, Yuvraj will be out for a couple of weeks but we don't know how long that is going to be," Moody hoped for Yuvraj's speedy recovery from an ankle injury.
The rating agency was hopeful that RIL would sort out technical problems being faced at its flagship eastern offshore KG-D6 fields where output has almost halved in past two years.
Moody's expect RBI to hold policy 'repo' rate steady to have a neutral stance in this growth
The state-owned bank's loss largely offsets the Rs 1,800-crore (Rs 18-billion) capital injection the government will make in FY14.
While current coach Anil Kumble is an automatic entry into the process, the others in the fray are Australian Tom Moody and Englishman Richard Pybus.
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