InvestorQ : Why have the Nifty and the Sensex almost ignored the rating downgrade by Moody’s and continued to rally higher?
shrinidhi Rajan made post

Why have the Nifty and the Sensex almost ignored the rating downgrade by Moody’s and continued to rally higher?

Answer
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Riya Dwivedi answered.
3 months ago


It is true that despite the downgrade of sovereign ratings by Moody’s, Nifty and the Sensex as well as heavyweights have continued to rally higher. Even leading businessmen like Uday Kotak have emphasised that credit rating is purely an opinion and may have limited impact on the real economy. It may be recollected that on Monday the 01 of June, Moody’s had downgraded India's rating to Baa3 which is the lowest in the investment grade. Any downgrade below this makes it Junk Status. It may be recollected that in the aftermath of the financial crisis in 2007, Moody’s and other rating agencies had come in for a lot of flak for giving favourable ratings to insolvent institutions like Lehman Brothers. Even in the Indian context, rating agencies are under scrutiny for being lax in the IL&FS issue. Uday Kotak also emphasized that the priority now was to get growth back on track.