Does Credit Rating Revisions Affect the Price of Common Stock: A Study of Indian Capital Market.

This article investigates the impact of credit rating changes on the share prices of top Indian companies listed on the National Stock Exchange (NSE) from 2009 to 2019, focusing on upgrades and downgrades issued by domestic credit rating agencies (CRAs) such as CRISIL, ICRA, and CARE. Using event study methodology, the study finds that credit rating downgrades elicit significant negative abnormal returns and stronger market reactions, particularly in the metal industry, while upgrades generally show insignificant effects except in some automobile firms. The nationality of the CRA is identified as a key factor, with domestic agencies' downgrade announcements provoking more pronounced market responses than international agencies. Overall, the findings suggest that Indian investors exhibit a conservative bias toward negative information post-global financial crisis, and that credit rating changes have limited industry-specific effects in this developing market context.