Fitch Ratings on Monday said the shock to economic activity from the latest wave of COVID-19 pandemic will be less severe than the one in 2020, but recovery is likely to be delayed as economic activity dropped in April-May. The global rating agency said there are growing indications that the latest wave of COVID-19 infections will add to risks among financial institutions (FIs) and anticipates that the Reserve Bank of India (RBI) may introduce additional measures to support the financial sector if indications of economic stress mount.
To attract capital into infrastructure projects, the ratings system needs a fresh look.
It believes that there had been "little progress" in structural reforms.
While retaining India's sovereign rating at 'BBB-' with a negative outlook, S&P said there is at least a one-in-three likelihood of a downgrade within the next 12 months.
Rates India 'BBB-' with a negative outlook.
'The slide in growth has arisen primarily because we have an NBFC crisis on top of a banking crisis,' points out T T Ram Mohan.
Retaining India's sovereign rating at the lowest investment grade, global agency S&P on Tuesday warned that a downgrade is likely for the country if its political climate worsens and pace of fiscal reforms slows down.
The rating agency revised the outlook for EXIM, SBI, Bank of Baroda, Bank of Baroda (New Zealand), Bank of India, Canara Bank, Punjab National Bank, ICICI Bank, Axis Bank while affirming their ratings. At the same time, Fitch has affirmed IDBI Bank Ltd's (IDBI) rating, while maintaining the outlook at negative.
Infy, L&T key movers while auto stocks dropped
ICICI Bank was the top Sensex gainer after S&P Global Ratings affirmed its 'BBB-' long-term issue ratings on the senior unsecured bonds.
The overall breadth was marginally positive as 1,447 stocks advanced while 1,260 stocks declined.
Fitch said the full implications of Patel's resignation will only become clearer once there is some indication of the RBI's policy approach under his replacement, Shaktikanta Das
Fitch says possibility of downgrading India's sovereign rating is more than 50 per cent.
S&P warned about spending on subsidies and heavy government debt.
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Citing economic slowdown and political roadblocks to policy-making, rating agency S&P on Monday warned India could become the first BRIC nation to lose investment-grade rating.
Confidence in the company as government is the biggest shareholder.
It is rare for Cabinet ministers to tick off state-owned companies publicly, yet that was what then petroleum and natural gas minister Dharmendra Pradhan did for ONGC. Speaking at an event on June 29, Pradhan said he has asked India's premier exploration company to find fresh oil acreages fast. "Do it yourself through some joint venture (or) through a new business model. But the government cannot permit you to hold resources for an indefinite time." The reason for this stricture is India's rising dependence on imported oil and gas. Or, to put it another way, falling domestic production (see chart: "Crude truth"), especially from ONGC, which faces a simple problem.
Moody's Investors Service on Tuesday slashed India's growth forecast for the current financial year to 9.3 per cent saying that the second wave of coronavirus infections hampers economic recovery and increases risk of longer-term scarring. Moody's, which has a 'Baa3' rating on India with a negative outlook, said obstacles to economic growth, high debt and weak financial system contrain sovereign credit profile. The US-based rating agency had in February forecast a 13.7 per cent economic growth for the current fiscal (April 2021-March 2022).
The film stars debutante Arjun Kapoor and Parineeti Chopra
The department of economic affairs, in its Monthly Economic Review for September, said critical reforms undertaken by the government will put India to a strong and sustainable growth path in the long run.
The government allocated Rs 650 billion for petroleum subsidies in FY14, of which Rs 450 billion was used to pay oil marketing companies for the subsidy gap incurred in the previous financial year.
Rating agency Fitch on upgraded outlook of 10 financial institutionals, including SBI, ICICI Bank and EXIM Bank of India to 'stable' from 'negative' earlier following revision in the country's outlook.
The 50-share NSE Nifty ended flat, up by 9.85 points, or 0.09 per cent, at 10,399.55.
Fitch frowns at government pay hikes.
India's budget for 2015/16 highlighted the government's commitment to keeping the fiscal deficit low.
The CreditWatch action follows Vedanta's announcement that it would acquire a controlling stake in India-based oil and gas company Cairn India Ltd.
IKF Finance Ltd said Credit Analysis and Research Ltd decided to retain 'CARE BBB' rating for its Rs 20 million non convertible debentures programme.
Credit rating agency Standard & Poor's has said it might not downgrade India's sovereign credit rating further, after the government announced plans to reduce the gap between income and expenditure
Factoring in the government's push to improve its finances and higher growth, Standard & Poor's today revised the outlook on India's sovereign credit rating to stable from negative. At the same time, it warned that high inflation could spoil the party. The agency affirmed the 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India.
Chief Economic Advisor Krishnamurthy Subramanian said India's economy will witness a decline in the current fiscal, but the drop will be limited if there is an economic recovery in the October-March period.
Sitharaman's Budget missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of GDP in the current fiscal as compared to 3.3 per cent previously planned.
Although the Fitch revised the outlook on Long-term Local Currency Issuer Default Rating from stable to negative, it has retained the investment grade rating at BBB-, which indicates low credit risk. The downgrade by Fitch is one of the main reasons for all-round selling in the stock markets. Another global rating agency Standard and Poor's last week had said it might downgrade India's sovereign ratings, if the country's rising inflation and widening fiscal deficit.
Fitch Ratings director Thomas Rookmaaker said India's debt-to-GDP ratio is likely to rise to 76 per cent from 70 per cent currently due to wider fiscal deficit and low economic growth.
The corporate credit rating with a positive outlook, BBB, is higher than India's rating and "highlights the financial robustness of our business model and operating strengths of the company," TCS informed the Bombay Stock Exchange. According to S&P, the company has strong liquidity, with cash and bank deposits of Rs 1,230 crore (Rs 12.3 billion), about 9.4 per cent of total assets as on March 31, 2007.
The double whammy saw the Bombay Stock Exchange's benchmark Sensex fall 3 per cent or 456.39 to close at 13,469.85 even as global rating agency Standard and Poor's suggested it might lower India's sovereign rating of BBB- (investment-grade status) due to the country's deteriorating credit profile over the last 12 months.
The agency said the rating revision to stable with apositive outlook reflects continuing strong financial and operating performance.
The operating environment is unpredictable, but if the bank can't give a clear picture of what's in store, calling the bottoming out of its asset quality stress is nearly impossible.
The government has promised to keep the deficit at 4.1%
