India's first risk on rally in a long time has probably been nipped int he bud effectively by the S&P announcements ahead of the IIP data for what is likely the orst quarter for the Indian Economy Credit Suisse joins us in suggesting June's numbers ould not be good but that the next few months are unlikely to be as bad as Pranab steps out to Raisina Hill from the Congress stable and Manmohan Singh itches to take control and bring in a 1Tln worth of pprojects back in the reckoning

The Rupee will suffer all week and thus equities will have to stay away from tracking the upside they had started on in the morning earlier as S&P gets ready to probably conbvert the negative outlook into a lasting dongrade that takes India below BBB- It on' tbe the first time S&P has pre empted a dongrade based on the last of a string of bad results for the Indian Economy as it also holds a unregulated negative bias andants to play catch up more than review the reasons set in the outlook for a downgrade/upgrade. If the downgrade does not happen it would be because indian liquidity prolem long solved has taken interest rates to a low of 8.1% and after a rate cut this eekend the interest rates ould trend down below 8% before growth also responds. The problems of the CAD and the Fisc have hardly been solved but are unlikely to see any deterioration and political inaction is unlikely to take our costs or the fiscal and current deficit to any orse levels. For Fiscal 2013 we would repairt the deficits to at least 5.5% and 3.5% despite the political inaction.  

Posted via email from The India Investment Post