India's Modi brings message of growth on first US visit

Indian stocks rallied, with the benchmark index posting its biggest increase in a week, after Standard & Poor’s raised the country’s credit rating outlook to stable from negative. The rupee and bonds advanced.

The S&P BSE Sensex Index jumped 0.6 percent to 26,626.32 at the close, recovering from a loss before the announcement. State Bank of India, the nation’s biggest lender, paced gains among its peers. Tata Steel Ltd. rose for the first time this week. The rupee strengthened 0.3 percent against the dollar, while the yield on 10-year government notes fell about five basis points to 8.44 percent.

S&P maintained its BBB- rating on Asia’s third-largest economy, the lowest investment grade, and said it could raise the rating if economic growth quickens and fiscal, external or inflation metrics improve. The outlook upgrade removes the risk of a downgrade to junk status for Prime Minister Narendra Modi, who won the nation’s biggest election victory in three decades in May by pledging to revive economic expansion.

“From the threat of a downgrade we are on the path of a ratings upgrade,” Sampath Reddy, the chief investment officer at Bajaj Allianz Life Insurance Co., which manages $6 billion, said by phone from Pune, near Mumbai. “The S&P move will help India attract more inflows.”

The Sensex has rallied 26 percent this year as foreigners bought $13.9 billion of Indian shares, the most in Asia, amid prospects for faster growth under Modi’s government. India’s economy grew at the fastest pace in more than two years in the quarter ended June, data showed last month.

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