New Delhi, Jan 10 (IANS) Global credit rating agency Moody’s Investor Services has raised India’s sovereign credit ranking to investment grade.

The Moody’s upgraded the country’s short-term foreign currency rating from speculative to investment grade, saying “diverse sources of Indian growth have enhanced its resilience to global shocks”.

The present slowdown, it said, “could reverse sometime in 2012-13, as inflation cools from current 9 percent levels”.

The news was welcomed by the markets with the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) rallying 350 points or 2.22 percent to close at 16,165.09 points Tuesday.

The rating agency improved the recommendation on long-term government bonds, raising from Ba l (speculative) to Baa3 (investment).

Apart from this, ratings on short-term government bonds have been upgraded for the first time since it was newly assigned in 1998 from NP (Not Prime) to P-3 (from speculative to investment grade).

“Government eliminated petrol subsidies and changed the way fertilizer subsidies are calculated, which may yield some budgetary savings,” Moody’s said, raising the rating.

“There have also been initiatives on the revenue front involving simplification (and hence hoped-for improvements in compliance) of indirect and direct taxes.”

The new ratings assume importance as Indian companies can now raise foreign funds at cheap rates.

The upgrade would also positively impact the rupee which has depreciated by almost 20 percent against dollar in the last four months. Rupee is the worst performing currency in Asia.

“Moody’s upgrade follows a positive rating action by Dominion Bond Rating Service. Similarly, in its June 2011 report, Fitch affirmed the credit ratings issued the year before and appreciated the management of the economy by India,” said the finance ministry.

India’s sovereign debt is rated by six international sovereign credit rating agencies namely Standard and Poor’s (S&P;), Moody’s Investors Service, Dominion Bond Rating Service (DBRS), Fitch Ratings, Japanese Credit Rating Agency (JCRA) and Rating and Investment Information (R&I;).