India’s credit outlook upgrade by S&P helped the equity benchmarks recover in late trade and snapped three-day losing streak on Friday. Indices fell nearly 3 percent in previous three sessions due to Supreme Court’s coal verdict, deferral of gas pricing and geopolitical tensions.

The 30-sharemarket BSE Sensex climbed 157.96 points to close at 26626.32 while the 50-share NSE Nifty managed to hold the important support level of 7850, up 57 points at 7968.85, making positive start of October series. However, during the day indices had fallen nearly a percent due to weak global cues. Standard & Poor’s Ratings Services today revised its outlook on India to stable from negative .

However, earlier in April 2012, the rating agency had cut India’s outlook to negative. It affirmed ‘BBB-‘ long-term and ‘A-3’ short-term unsolicited sovereign credit ratings on India. It also affirmed transfer and convertibility assessment of ‘BBB+’.

“India’s improved political setting offers a conducive environment for reforms, which could boost growth prospects and improve fiscal management. Its external position is a key credit strength and well-entrenched democratic political system is another credit support,??? it reasoned.

The rating agency further said it could raise the rating if the economy reverts to a real per capita GDP trend growth of 5.5 percent per year and fiscal, external, or inflation metrics improve. “The change in rating indicates amplified conviction in the government’s intent and ability to make changes for growth. It also implies belief that budgeted fiscal targets are more likely to be met,??? said Jayant Manglik, president-retail distribution, Religare Securities.

According to him, investor confidence will move up a notch along with the rating and this essentially means money waiting on the sidelines will now come into India. S&P also revised outlook on six Indian companies to stable from negative, which are Reliance Industries, NHPC, NTPC, Power Grid, TCS and ONGC.

Meanwhile, Prime Minister Narendra Modi will start his five-day US visit early morning on Saturday. Experts believe the Union Budget next year is more important than this US visit. Ruchir Sharma, Head of Emerging Markets and Global Macro, Morgan Stanley Investment Management dismisses all the hoopla about Prime Minister Narendra Modi’s maiden visit to the United States.

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