NDA win to prop investor sentiment in stocks rupee: Moody's

A supporter of BJP, wearing a mask of Narendra Modi, the prime ministerial candidate for BJP, celebrates after poll results at the party headquarters in New Delhi on Friday, May 16, 2014. Photo: Reuters

Positive investor sentiment, which got a boost in the run-up to the Lok Sabha polls, is likely to be sustained following the thumping victory of the BJP-led National Democratic Alliance, Moody's Investors Service said
on Friday.
Any change in India's sovereign credit profile hinges upon the government's fiscal position, regulatory constraints on investment and output and growth in social and physical infrastructure, the rating agency said.
It assigns a 'Baa3' rating to India, signifying moderate credit risk, with a stable outlook.
Moody's also projected a downside risk to 5 per cent GDP growth this year.
"The significant parliamentary majority won by the BJP-led NDA in India is likely to sustain the investor sentiment which has recently boosted equity indices and the rupee," Moody's said in a note.
Full Coverage: Lok Sabha Elections 2014
While policy measures to revive the economy are likely over the coming months, India's growth, fiscal and inflation metrics are unlikely to improve immediately, Moody's said.
"We expect GDP growth to continue to be below potential, at about 5 per cent this year, and the possibility of a sub-par harvest due to El Nino effects poses downside risks," it said.
The agency said the impact of election results on the country's credit profile will be apparent over the next several months as economic policy measures are implemented.
In the medium term, the extent to which these steps revive the economy will depend on the specific measures adopted by the new government and the pace of their implementation, it added.