Market likely to tread caution

With the Budget only a week away, the market is likely to trade cautiously this week. Still the undertone of the market remains optimistic o...

By: ENS Economic Bureau
Mumbai | February 21, 2005 12:00 AM IST

1 min read

With the Budget only a week away, the market is likely to trade cautiously this week. Still the undertone of the market remains optimistic on hopes of a reforms-oriented Budget, strong foreign fund inflows and the impressive performance of the corporate sector.

While the foreign fund inflows are likely to continue, there could be a slowdown if the international rating agency S&P decided to downgrade the sovereign rating.

S&P Ratings Services said last week that it was examining the circumstances surrounding missed interest payments in late December 2004 by Instrumentation Ltd and HMT, two public sector companies under India’s Ministry of Heavy Industries.

The missed payments on the bond issues, reportedly guaranteed by the government, have become the direct obligation of the government. Hence, progress in fulfilling these obligations has implications for India’s credit rating.

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