Indian market climbed for the week as investor confidence was lifted following the reaffirmation by Moody’s rating agency that India’s outlook is stable citing that the economic growth is getting back on track.
India's BSE Sensex was up 4.5 percent and closed at 19339.90. Market sentiment rose as Moody’s said that it expected India’s economy to grow supported by high savings and investment rates.
Meanwhile, Moody’s cautioned that continuing inflation and high fiscal deficit are challenges for the economic growth. “The rating is constrained by the credit challenges posed by India’s poor social and physical infrastructure, high government deficit and debt ratios, recurrent inflationary pressures and an uncertain operating environment,” it said in its credit analysis on India.
Market sentiment was also lifted as Goldman Sachs upgraded Indian stocks to a "overweight" rating from a "market weight" rating citing revival of economic growth and expectations of policy reforms.
"For India, we believe the upside drivers include a recovery in growth, a decline in inflation, and the potential for continued policy reforms. While we acknowledge that the recovery in growth and deceleration of inflation may not be imminent, India is less affected by the near-term concerns of the US 'fiscal cliff' relative to other markets in Asia,” Goldman Sachs said in a report.
According to Goldman Sachs, India’s gross domestic product is expected to grow at 6.5 percent in 2013. It added that India's S&P CNX Nifty Index could rise 14 per cent by the end of 2013.
Meanwhile, according to data released Friday by Ministry of Statistics and Programme Implementation India’s GDP rose 5.3 percent in the quarter ending September compared to same period the earlier year, down from 5.5 percent in the previous quarter. The fall in economic growth has given hope to investors that the Reserve Bank of India will announce monetary easing policy soon.
Global cues also favored Indian markets this week. Investors continued to focus on the U.S. where developments on the fiscal cliff are being closely watched. Market participants hope that the U.S. President Barack Obama and the congressional leaders will make advances toward reaching an agreement to avert the fiscal cliff.
Investor confidence was also buoyed as the Eurogroup agreed on a debt reduction of 40 billion euros ($52 billion) for Greece, which is expected to provide much needed relief to the country’s economy.
Major gainers: Shares of Cipla Ltd gained 8.53 percent. Shares of Wipro Ltd advanced 7.17 percent. Shares of ICICI Bank rose 7.14 percent.