The downgrade of Indian banking sector from stable to negative by Moody’s shaken the Indian equity market and as result of this downgrade the Indian banking sector stocks faced huge selling pressure and the prices of the stocks of almost every bank fell.
Contrary to the Moody’s downgrade, it’s competitor in rating market today the leading rating company Standards & Poor’s has upgraded the Indian banking sector on the basis of strict and stringent domestic banking regulations and proper enforcement by the Reserve Bank of India.
This upgrade in rating by S&P is expected to improve the attractiveness of Indian banking sector stocks in domestic as well as international markets. But at the same time this upgrade is expected to create huge confusion in minds of investor as which rating they should rely upon. In such condition it is better to wait and watch and take decision depending on the situation instead of being carried by the market sentiments. Also I hope that the recent fall in the banking sector stock on the basis of Moody’s rating had nothing serious and market will understand it.