Latest news with #SonalBadhan
Economic Times
a day ago
- Business
- Economic Times
Foreign capital inflows set to rise post S&P upgrade, borrowing costs to ease
Synopsis S&P's credit rating upgrade for India is poised to accelerate foreign capital inflows, particularly into the debt market, and reduce borrowing costs for the government and corporations. The upgrade reflects confidence in India's sound fundamentals, growth momentum, and improved fiscal management. Other rating agencies are expected to follow suit, further boosting investor confidence. ANI The latest upgrade will lower borrowing costs for both the government and corporates, according to an economist. Foreign capital inflows into India are likely to accelerate following S&P's recent credit rating upgrade, which is also expected to lower borrowing costs for the country, said Sonal Badhan, Economist at Bank of Baroda (BoB)."In both the short and long term, foreign capital inflows can be expected to be impacted positively, as the upgrade reaffirms trust in India's 'sound fundamentals' and 'growth momentum'. We are likely to see higher FPI inflows this year and a decline in bond yields," BoB Economist Told ANI. According to Badhan, India's recent credit rating upgrade by S&P is set to accelerate foreign capital inflows, particularly into the debt market, and lower borrowing costs for both the government and corporates, according to an RBI's Annual Financial Account data for Q2 of FY 2024-25 (July-September 2024) indicates that the Net foreign direct investment recorded an outflow of USD 2.2 billion, compared to an outflow of USD 0.8 billion during the same quarter in FY recorded provisional FDI inflows of USD 81.04 billion in FY 2024-25, marking a 14 per cent increase from USD 71.28 billion in FY 2023-24, according to the government data. "While there will be more room for the government to borrow, we believe it is unlikely that the government will make use of it. In the union budget for FY26, the centre had committed to gradually bring its debt-GDP ratio down, thus implying its intent to keep the borrowing program range bound," she added. "In the Union Budget for FY26, the Centre had committed to gradually bring its debt-to-GDP ratio down, implying its intent to keep the borrowing programme range-bound," the economist economist further added that the impact on borrowing costs is expected to be swift after the upgradation of the rating. "This will definitely help lower the borrowing cost for both government and corporates, as the rates for corporates mimic the trend in the G-sec market. The impact will be almost immediate, as we have already seen ~8bps decline in 10Y G-sec bond yields after the decision came," she added. Badhan further added that the upgrade is also likely to encourage other rating agencies, such as Moody's and Fitch, to follow suit. "We expect other rating agencies also to follow suit, as the upgrade has been long overdue. Indian economy has consistently performed well even amidst turbulent global environment and our central government fiscal deficit ratio has also consistently remained on track of consolidation, without compromising upon the impetus required to provide growth a boost," the economist a significant boost to investor confidence, S&P Global Ratings has upgraded India's long-term unsolicited sovereign credit rating to 'BBB' from 'BBB-', while also raising the short-term rating to 'A-2' from 'A-3'.The outlook on the long-term rating remains stable, reflecting optimism around India's policy continuity, robust economic growth, and improved fiscal the rating upgrade, S&P also revised its transfer and convertibility assessment for India to 'A-' from 'BBB+', citing an improved monetary and external to S&P, the stable outlook suggests confidence in India's ability to sustain its growth trajectory, driven by high levels of infrastructure investment and a disciplined policy environment.
Time of India
a day ago
- Business
- Time of India
Foreign capital inflows set to rise post S&P upgrade, borrowing costs to ease: BoB Economist
Foreign capital inflows into India are likely to accelerate following S&P's recent credit rating upgrade, which is also expected to lower borrowing costs for the country, said Sonal Badhan, Economist at Bank of Baroda (BoB). Independence Day 2025 Before Trump, British used tariffs to kill Indian textile Bank of Azad Hind: When Netaji gave India its own currency Swadeshi 2.0: India is no longer just a market, it's a maker "In both the short and long term, foreign capital inflows can be expected to be impacted positively, as the upgrade reaffirms trust in India's 'sound fundamentals' and 'growth momentum'. We are likely to see higher FPI inflows this year and a decline in bond yields," BoB Economist Told ANI. According to Badhan, India's recent credit rating upgrade by S&P is set to accelerate foreign capital inflows, particularly into the debt market, and lower borrowing costs for both the government and corporates, according to an economist. The RBI's Annual Financial Account data for Q2 of FY 2024-25 (July-September 2024) indicates that the Net foreign direct investment recorded an outflow of USD 2.2 billion, compared to an outflow of USD 0.8 billion during the same quarter in FY 2023-24. India recorded provisional FDI inflows of USD 81.04 billion in FY 2024-25, marking a 14 per cent increase from USD 71.28 billion in FY 2023-24, according to the government data. Live Events "While there will be more room for the government to borrow, we believe it is unlikely that the government will make use of it. In the union budget for FY26, the centre had committed to gradually bring its debt-GDP ratio down, thus implying its intent to keep the borrowing program range bound," she added. "In the Union Budget for FY26, the Centre had committed to gradually bring its debt-to-GDP ratio down, implying its intent to keep the borrowing programme range-bound," the economist said. BoB economist further added that the impact on borrowing costs is expected to be swift after the upgradation of the rating. "This will definitely help lower the borrowing cost for both government and corporates, as the rates for corporates mimic the trend in the G-sec market. The impact will be almost immediate, as we have already seen ~8bps decline in 10Y G-sec bond yields after the decision came," she added. Badhan further added that the upgrade is also likely to encourage other rating agencies, such as Moody's and Fitch, to follow suit. "We expect other rating agencies also to follow suit, as the upgrade has been long overdue. Indian economy has consistently performed well even amidst turbulent global environment and our central government fiscal deficit ratio has also consistently remained on track of consolidation, without compromising upon the impetus required to provide growth a boost," the economist said. In a significant boost to investor confidence, S&P Global Ratings has upgraded India's long-term unsolicited sovereign credit rating to 'BBB' from 'BBB-', while also raising the short-term rating to 'A-2' from 'A-3'. The outlook on the long-term rating remains stable, reflecting optimism around India's policy continuity, robust economic growth, and improved fiscal management. Alongside the rating upgrade, S&P also revised its transfer and convertibility assessment for India to 'A-' from 'BBB+', citing an improved monetary and external environment. According to S&P, the stable outlook suggests confidence in India's ability to sustain its growth trajectory, driven by high levels of infrastructure investment and a disciplined policy environment.
Time of India
06-06-2025
- Business
- Time of India
Banks, autos, and realty stocks in focus as RBI likely to deliver third straight rate cut
Rate-sensitive sectors such as banks, autos, and realty are expected to remain in focus on Friday, with the Reserve Bank of India (RBI) widely anticipated to announce a third consecutive interest rate cut. Easing inflation has created room for the central bank to prioritise economic growth. A Reuters poll shows that 53 of 61 economists expect the Monetary Policy Committee (MPC) to cut the repo rate to 5.75%. Two respondents foresee a deeper 50 basis point cut, while six expect no change. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like What Happens When You Massage Baking Soda Into Your Scalp Read More Undo This divergence stems from a shifting macroeconomic backdrop—retail inflation has fallen below the 4% mark, while the domestic growth outlook remains upbeat. However, factors such as global monetary policy trends, monsoon-related food inflation risks, and capital flow dynamics continue to weigh on the decision. Debopam Chaudhuri, Chief Economist at Piramal Group, argues for a bold move, recommending a 50 bps cut. Speaking to ANI, he said, "The MPC should consider a larger-than-expected 50 basis point rate cut this time. Rate transmission has only started to gain momentum after the policy repo rate was reduced to 6% in April, as prior liquidity constraints had kept market yields high. A 50 bps cut at this juncture could compensate for lost time and provide a significant boost to economic growth." He also emphasised the favourable timing, as the US Federal Reserve is anticipated to initiate policy easing soon. "With the US Fed likely to start cutting rates shortly, concerns about diminishing yield differentials between the US and India are expected to lessen. Lower borrowing costs would enhance domestic growth prospects and solidify India's attractiveness as an investment hub, irrespective of the US debt spread," he remarked. Live Events On the other hand, Sonal Badhan, Economics Specialist at Bank of Baroda , supports a more measured approach. "We anticipate the RBI will lower rates by 25 bps in this week's announcement. This expectation is grounded in the significant moderation of inflation, which is anticipated to remain manageable in the upcoming months. Additionally, with predictions of a normal monsoon, the pressure on food inflation should be limited," she told ANI. Badhan expects the RBI to revise its FY26 inflation forecast downward by 10 bps due to better-than-expected Q1 data. However, she ruled out a 50 bps cut. "We consider a 50 bps cut unlikely as the June rate cut is seen as a front-loading measure. The RBI will also exercise caution until it has a clear understanding of the monsoon's spatial distribution. Furthermore, with the US Fed likely to remain on hold until September 2025, narrowing interest spreads could influence foreign portfolio investment inflows and the Indian rupee. Therefore, a 25 bps cut seems more prudent," she clarified. Also Read: India's top 10 priciest stocks in 2025: MRF to Elcid, see who tops the list Supporting the dovish stance, M. Govind Rao, member of the 14th Finance Commission and Chairman of the Karnataka Regional Imbalances Redressal Committee, said there is room for further easing. "The inflation rate is comfortably within the target range, providing sufficient scope for a rate reduction. Given the uncertainties posed by tariff hikes and global volatility, it is appropriate to lower interest rates to stimulate higher investment," he told ANI. As the MPC wraps up its discussions on June 6, all attention will be directed towards the statement from Governor Sanjay Malhotra at 10 am. With inflation under control and a strong emphasis on investment-driven growth, the RBI is faced with the crucial task of balancing support for growth while ensuring financial stability. ( Disclaimer : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
