While the rating agency downgraded India’s sovereign rating, BofA Securities’ economists see the present downturn as cyclical rather than structural; say fiscal stimulus is critical for recovery.
Trouble hit the private lender once again after ratings agency Moody’s cut the bank’s credit rating and assigned a negative outlook to the company. YES Bank shares dived 10% on the BSE on Friday .
Moody’s cut its India outlook due to concerns of weak growth and fiscal risks. The S&P BSE Sensex closed at 40,323.61, 300 points lower than the previous day’s closing figure.
Moody’s recent downgrading of Hong Kong’s sovereign rating and the slumping of the Hang Seng Index by over 13% since April reflect a substantial drop in consumer and investor confidence.
The next few months are crucial for the lender. Any more ratings downgrade is likely to send it into the prompt corrective action (PCA) framework which will check its freedom to conduct business.
