NEW DELHI/MUMBAI (Reuters) - Standard & Poor's lifted its outlook on India to stable from negative on Thursday, citing an improving fiscal position and strong economic growth but warned on inflation, giving a filip to stock and bond prices.
A deputy governor at the Reserve Bank of India said the Reserve Bank of India (RBI) was open to taking policy action ahead of its April 20 policy review. With headline inflation nearing 10 percent, the RBI is under increasing pressure to raise interest rates for the first time since the global downturn.
Earlier in the day, the government reported food inflation eased for the second straight week in early March but fuel inflation rose.
In affirming its "BBB-" long-term and "A-3" short term credit ratings on India, S&P said the government remains constrained by a high debt burden and deficit, and said inflation is a worry.
"In our opinion, the recent high inflation rate could also derail the stable macroeconomic and interest rate environments," S&P credit analyst Takahira Ogawa said in a statement.
On Monday, India reported headline wholesale price index (WPI) inflation of 9.89 percent for February.
Analysts said WPI would cross into the double digits by March before retreating over the next few months, but a pick-up in economic growth would keep WPI at high levels for the rest of the year.
India's 10-year bond yield fell 4 basis points after S&P raised the ratings outlook for India, while the 5-year swap rate shed 3 basis points. The 30-share BSE index ended up 0.2 percent. for more....log on to http://in.reuters.com/article/businessNews/idINIndia-47026820100318
A deputy governor at the Reserve Bank of India said the Reserve Bank of India (RBI) was open to taking policy action ahead of its April 20 policy review. With headline inflation nearing 10 percent, the RBI is under increasing pressure to raise interest rates for the first time since the global downturn.
Earlier in the day, the government reported food inflation eased for the second straight week in early March but fuel inflation rose.
In affirming its "BBB-" long-term and "A-3" short term credit ratings on India, S&P said the government remains constrained by a high debt burden and deficit, and said inflation is a worry.
"In our opinion, the recent high inflation rate could also derail the stable macroeconomic and interest rate environments," S&P credit analyst Takahira Ogawa said in a statement.
On Monday, India reported headline wholesale price index (WPI) inflation of 9.89 percent for February.
Analysts said WPI would cross into the double digits by March before retreating over the next few months, but a pick-up in economic growth would keep WPI at high levels for the rest of the year.
India's 10-year bond yield fell 4 basis points after S&P raised the ratings outlook for India, while the 5-year swap rate shed 3 basis points. The 30-share BSE index ended up 0.2 percent. for more....log on to http://in.reuters.com/article/businessNews/idINIndia-47026820100318
No comments:
Post a Comment