The Indian markets seem to have factored in the credit rating downgrade by US agency Standard and Poor’s (S&P).
After falling 56 points to close at 17,151 on Wednesday, the benchmark Sensex of the Bombay Stock Exchange ended with a minor loss of 21 points at 17,131 on Thursday. The index, however, saw an intra-day decline of 188 points on Wednesday as a knee jerk reaction to the downgrade."We all knew the issues so in that sense there was nothing new and it wasn’t really a downgrade but a warning for everybody and the markets will only react if there is fresh negative or positive news — like maybe the crude oil price spiking to over $200 a barrel or inflation going up again," said Rashesh Shah, chairman and CEO, Edelweiss group.
S&P had sounded an alarm on India’s high fiscal, current account deficit and the country’s slowing economic growth. These, said Brinda Jagirdar, economist, State Bank of India, were already mentioned in the economic survey and credit policy.
Indian companies, too, shrugged off the S&P move. “It is an alert for the government and political parties. They should speed up the reform process,” said YM Deosthalee, CMD, L&T Finance Holdings.