By Shashwat Alok

The rupee and stock markets didn’t react and, if anything, posted modest gains on Tuesday, the day India’s credit ratings were downgraded to Baa3 by Moody’s. It is possible that markets had already expected and priced in a downgrade. Alternatively, the Street may have subsumed that these sovereign ratings tend to be biased and, consequently, discount the information content — or lack thereof. The truth, as usual, lies somewhere in between.