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Moody's downgrade: Expect bouts of correction; sell-off in markets unlikely

Stock markets generally discount an outcome a few months in advance. They might have seen the bottom in March, unless a more ferocious second wave results in a fresh lockdown, writes Ambareesh Baliga

Topics
Moody Rating | India's sovereign rating | stock market trading

Ambareesh Baliga 



Ambareesh Baliga. Photo: Twitter (@ambareeshbaliga)
Ambareesh Baliga. Photo: Twitter (@ambareeshbaliga)

Moody’s Investor Service on Monday downgraded India’s sovereign rating to Baa3 from Baa2, with a negative outlook. The rationale for Moody’s first such downgrade in two decades was “policy-making institutions will be challenged in enacting and implementing policies which effectively mitigate the risks of a sustained period of relatively low growth, significant further deterioration in the general government fiscal position and stress in the financial sector”. In short, we have been pushed to a notch above “junk grade”.

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First Published: Tue, June 02 2020. 07:43 IST

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