India’s financial markets are facing ‘trust deficit’, said S&P Global Ratings on Wednesday. There are also disruptions due to defaults by major non- banking finance companies which could put strain on weaker firms.
People are losing trust on Indian economy during present government. Even foreign investors are withdrawing their money from Indian markets. This means that PM Modi’s claims of being a credible image around world are false.
World’s top rating agency Standard and Flood Global Ratings has confirmed that people are losing trust in “Modinomics”. S&P has released it report titled ‘A look at whether India Inc can handle the liquidity crunch in debt capital markets’. S&P said that rated Indian companies are relatively well-positioned to withstand the stress in India’s debt capital markets.
“While liquidity stress has begun to gradually ease, we expect tougher conditions could linger for months. Indian companies including nonbank finance companies (NBFCs) are vulnerable to spiking interest rates because they have increased reliance on short-term debt, after years of relatively good financing conditions for shorter-dated paper,” S&P said.
“Bank asset quality could come under pressure because of the IL&FS default. On the other hand, banks will benefit from more risk-based pricing and reduced competitive intensity,” S&P added.
Nevertheless, costlier or restricted financing could delay some growth plans and hurt profitability.
