First thoughts on the Moody’s upgrading outlook on India
Moody’s has upgraded the outlook of India to positive versus stable.
I would broadly say three things. First, this is a validation of the broad direction and stance of government policy over the last many months including the Budget and so on. It also confirms what we have been seeing in the Economic Survey and the Budget that the outlook on the Indian economy is positive in terms of continuing macro stability and better growth prospects because of various factors like reforms, oil prices, monetary easing. Third, it’s a point that stress in the survey and the finance minister also stressed in the Budget that this shows that the government’s strategy of showing public investment lead and providing a stimulus to growth is consistent with our commitment.
The rating upgrade is one more valuation of the overall stance of macro and growth policies in India.
But the fact is they are also signaling that we are moving in the right direction. Further in the next 12-18 months if things get better, we could expect a further ratings upgrade as well.
We have gone into great detail in the Budget and in survey on all that planning will be done and needs to be done and remember policies are going to be pursued because they are desirable and not necessarily just because of their impact on investment rating. But the overall stance of reform will continue, continuing commitment to macro stability and growth. So broadly that’s the thrust.
India's fundamentals improving, inflows to continue
It’s a reflection of the fundamentals improving dramatically in India and it will lead to further inflows by FIIs and we have actually seen quite a lot of inflows over the past few months into bonds especially fixed income. This is because interest rates in India are bound to come down as inflation comes down and on a risk reward basis bonds are probably even more attractive than equities at this point, so foreign inflows will continue.
India is attractive as compared to the other Asian markets at this point
From valuation perspective India is a bit on the expensive side but the fundamentals and the outlook, inflation outlook, interest rate outlook, outlook for oil relatively the low oil prices all bode well for India. Again, it’s a bit of a valuation question as how far we can progress from here because we had a pretty good run already but overall the India story is growth story, domestic growth story which does not depend so much on what the Fed is going to do next or what is going to happen in China. It’s a standalone growth story and that’s what makes it attractive.
Long-term India story intact; buy on dips
Moody’s positive outlook on India is a long-term positive because it opens up the flood gates for money to come into India
Moody’s positive outlook on India is a long-term positive because it opens up the flood gates for money to come into India, says Dharmesh Mehta, MD and CEO, Axis Capital. According to him, the long-term India story is very much intact and one should be buying into any kind of dips especially the earnings which may not be that great. “People are still looking at what will happen in the next one-two years and if those reform processes are pushed ahead, India looks as a great investment story,
It is a very long-term positive statement rather than near-term because it gives one more kind of a positive news for India by which investors are looking to invest in India in a long-term manner rather than the short-term way. Markets will go up and down on this news because it is always sell on news and buy on rumours, long-term it will be very positive because it opens up the flood gates for money to come into India.
The mood amongst global investors for Indian
I think they are overweight India and all those who left out India earlier are planning to come in especially the long-term pension fund kind of investors who were waiting for all those reform process to start and happen on the ground rather than only hear about it. With more and more execution on the ground, you will see those investors coming in. If you look at India, what is the other option for large long-only investors to grow because the only competition India is the US dollar. Whenever US dollar looks more stable or much more attractive, people will move away to it but till then India will definitely get a large portion of inflows.
Earnings will be the key trigger in the near-term
I have always said that this is the higher-top higher-bottom market. So you keep on getting higher tops in the market and you see some correction which will again give opportunities to investors who invest in the market. And in this case your ‘buy on rumours sell on news’ may act as a reverse that you buy on news and sell on rumours. Long-term India story is very much intact, one should be buying into any kind of dips that we will be seeing in near future especially the earnings that won’t be as great and part of it is already expected and so, I am not too worried about that. People are still looking at what will happen in the next one-two years and if those reform processes are pushed ahead, India looks as a great investment story.
Outlook upgrade signals govt moving in right direction
Rating agency Moody’s has affirmed India’s sovereign rating at BAA3, but raised the rating outlook to ‘positive’ from ‘stable’. However it cautioned that unless the country’s banking system woes were resolved, its credit profile would remain constrained.
Happy Investing
Source : Moneycontrol.com
Moody’s has upgraded the outlook of India to positive versus stable.
I would broadly say three things. First, this is a validation of the broad direction and stance of government policy over the last many months including the Budget and so on. It also confirms what we have been seeing in the Economic Survey and the Budget that the outlook on the Indian economy is positive in terms of continuing macro stability and better growth prospects because of various factors like reforms, oil prices, monetary easing. Third, it’s a point that stress in the survey and the finance minister also stressed in the Budget that this shows that the government’s strategy of showing public investment lead and providing a stimulus to growth is consistent with our commitment.
The rating upgrade is one more valuation of the overall stance of macro and growth policies in India.
But the fact is they are also signaling that we are moving in the right direction. Further in the next 12-18 months if things get better, we could expect a further ratings upgrade as well.
We have gone into great detail in the Budget and in survey on all that planning will be done and needs to be done and remember policies are going to be pursued because they are desirable and not necessarily just because of their impact on investment rating. But the overall stance of reform will continue, continuing commitment to macro stability and growth. So broadly that’s the thrust.
India's fundamentals improving, inflows to continue
It’s a reflection of the fundamentals improving dramatically in India and it will lead to further inflows by FIIs and we have actually seen quite a lot of inflows over the past few months into bonds especially fixed income. This is because interest rates in India are bound to come down as inflation comes down and on a risk reward basis bonds are probably even more attractive than equities at this point, so foreign inflows will continue.
India is attractive as compared to the other Asian markets at this point
From valuation perspective India is a bit on the expensive side but the fundamentals and the outlook, inflation outlook, interest rate outlook, outlook for oil relatively the low oil prices all bode well for India. Again, it’s a bit of a valuation question as how far we can progress from here because we had a pretty good run already but overall the India story is growth story, domestic growth story which does not depend so much on what the Fed is going to do next or what is going to happen in China. It’s a standalone growth story and that’s what makes it attractive.
Long-term India story intact; buy on dips
Moody’s positive outlook on India is a long-term positive because it opens up the flood gates for money to come into India
Moody’s positive outlook on India is a long-term positive because it opens up the flood gates for money to come into India, says Dharmesh Mehta, MD and CEO, Axis Capital. According to him, the long-term India story is very much intact and one should be buying into any kind of dips especially the earnings which may not be that great. “People are still looking at what will happen in the next one-two years and if those reform processes are pushed ahead, India looks as a great investment story,
It is a very long-term positive statement rather than near-term because it gives one more kind of a positive news for India by which investors are looking to invest in India in a long-term manner rather than the short-term way. Markets will go up and down on this news because it is always sell on news and buy on rumours, long-term it will be very positive because it opens up the flood gates for money to come into India.
The mood amongst global investors for Indian
I think they are overweight India and all those who left out India earlier are planning to come in especially the long-term pension fund kind of investors who were waiting for all those reform process to start and happen on the ground rather than only hear about it. With more and more execution on the ground, you will see those investors coming in. If you look at India, what is the other option for large long-only investors to grow because the only competition India is the US dollar. Whenever US dollar looks more stable or much more attractive, people will move away to it but till then India will definitely get a large portion of inflows.
Earnings will be the key trigger in the near-term
I have always said that this is the higher-top higher-bottom market. So you keep on getting higher tops in the market and you see some correction which will again give opportunities to investors who invest in the market. And in this case your ‘buy on rumours sell on news’ may act as a reverse that you buy on news and sell on rumours. Long-term India story is very much intact, one should be buying into any kind of dips that we will be seeing in near future especially the earnings that won’t be as great and part of it is already expected and so, I am not too worried about that. People are still looking at what will happen in the next one-two years and if those reform processes are pushed ahead, India looks as a great investment story.
Outlook upgrade signals govt moving in right direction
Rating agency Moody’s has affirmed India’s sovereign rating at BAA3, but raised the rating outlook to ‘positive’ from ‘stable’. However it cautioned that unless the country’s banking system woes were resolved, its credit profile would remain constrained.
Happy Investing
Source : Moneycontrol.com
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