Fitch sends rating warning shot to India. Fitch rates both India and Indonesia BBB- with a stable outlook but the recent sharp sell-off in emerging markets, sparked by worries of a scaling back of cheap U.S. financial stimulus, has put the countries in the spotlight.
The rating agency said that with currency reserves still ample despite the downward trajectory, and both governments trying to mend economic imbalances, the market turbulence was not "a trigger for rating action at this point."
Andrew Colquhoun, Fitch's senior director for sovereigns in the region, said fears of an imminent balance of payments crises were misplaced given the current positions but stressed authorities needed to ensure market concerns were dealt with.
Both India and Indonesia's main stock markets .BSESN .JKSE have plunged 12 percent in the last three weeks as investors have started to head back to advanced economies like the United States and Europe where growth and returns are picking up.
The countries' currencies have received a battering too. The Indian rupee is at an all-time low after dropping 9 percent while the Indonesian rupiah is down 6.5 percent at a four-year trough.
"The question would be if the pressure on asset prices and currencies intensified to a stage, and were long lasting enough, to impact the economic stability in these economies," Colquhoun said.