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S&P hikes India outlook

September 26, 2014

Ratings agency Standard & Poor's has acknowledged India's recent reform drive by raising the country's credit outlook. But Prime Minister Narendra Modi will still have to make big-ticket moves to convince analysts.

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Standard & Poor's logo
Image: picture-alliance/dpa

S&P upped India's credit outlook from "negative" to "stable" on Friday, arguing that the prospects for more economic reforms had grown considerably under Prime Minister Narendra Modi's new right-wing government.

"The stable outlook reflects our expectations that the newly elected government will be able to implement reforms that spur growth, which in turn improves fiscal performance," the ratings agency said in a statement.

S&P kept its main sovereign credit rating for the Asian country unchanged at "BBB-," though, waiting for big-ticket economic measures needed to fire up growth.

Pleased investors

S&P's announcement came a day after the Asian Development Bank also expressed hope of a turnaround in India's economy under Modi.

Investors felt encouraged by the ratings agency's credit outlook statement, with India's benchmark index rising by 0.6 percent and the broader NSE index gaining 2 percent on Friday.

India's gross domestic product (GDP) expanded by 5.7 percent in the first quarter of the financial year, the best three-month performance in more than two years. A sharp narrowing of its current account deficit also boosted investor sentiment.

hg/cjc (Reuters, AFP)