Mumbai, Sep 26 (IANS): In line with the positive sentiment surrounding the country's economy due to recent reform process international ratings agency S&P Friday revised India's credit outlook to 'stable'.

The rating agency said that it revised India's rating from earlier 'BBB-', as it expected the government to keep its fiscal consolidation targets.

The S&P said: "The outlook indicates government can implement fiscal and economic reform. Rating outlook revision shows improved political setting."

"Political setting offers conducive environment for reforms. Government reform pick-up may let RBI (Reserve Bank) draft effective policy."

However, S&P cautioned that it can lower the rating if the government's structural reform agenda stalls or economic growth does not accelerates.

Finance Minister Arun Jaitley is sticking to the target of fiscal consolidation under which he aims to bring it down to 3.6 percent of GDP by 2015-16.

Recent data showed that India's economy expanded at its fastest pace in more than two years. The economy grew by 5.7 percent in the April-June quarter from 4.6 percent in the corresponding period last fiscal.

Other agencies like Moodys and Fitch too have rated India's outlook as stable. Moody's has assigned a 'Baa3' rating with a stable outlook.

While Fitch has asserted India's outlook as 'BBB-' with stable outlook.

Indian equities markets reacted positively to the rating upgrade.

The 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), which opened at 26,429.30 points, closed at 26,616.93 points, up 148.57 points or 0.56 percent from the previous day's close at 26,468.36 points.

The Sensex touched a high of 26,721.03 points and a low of 26,220.49 points in the intraday.

The S&P bank index gained 361.89 points, followed by metal index which was higher by 293.19 points, capital goods index rose 242.44 points, healthcare index was up 201.11 points and automobile index increased by 137.39 points.