When international rating agencies announced a negative
outlook on India's sovereign rating in early August, the equity and
bond markets barely reacted.
That was not because they disagreed with the assessment but
because the rating actions confirmed what the market already knew.
Sunil Gulati, head of investment banking at ING Barings, says:
"Second-generation reforms have simply not taken off."
An economist at a large US investment bank adds: "The market
[index] is down from 6000 to 3300; that's a verdict on economic
reforms." Ullal Bhat, chief investment officer, Jardine Fleming
Asset Management, takes a slightly different view: "The outlook is
negative, but given how bad things are in some east Asian countries
today, there is a feeling that India is not doing so badly."
Standard &Poor's lowered its outlook on India's sovereign
rating on domestic bonds to triple B minus from Triple B. A day
later Moody's dropped its...
