Moody's upgrades outlook on India to stable from negative; maintains Baa3 rating

Moody's said India's decision to keep the financial institutions flush with liquidity also reduced the risk to the country from the financial sector.

Ratings agency Moody's Investors Service on Tuesday upgraded its outlook on India to stable from negative, saying downside risks in Asia's third-largest economy and its financial institutions have reduced. Moody's affirmed India's sovereign credit rating at Baa3.

"The decision to change the outlook to stable reflects Moody's view that the downside risks from negative feedback between the real economy and financial system are receding," the agency said in a note.

Moody's said India's decision to keep the financial institutions flush with liquidity also reduced the risk to the country from the financial sector. The Indian economy has shown signs of a strong rebound after a second wave of COVID-19 infection killed thousands of people in April and May.