India is at risk of losing its investment grade rating, which would make it the first BRIC (Brazil, Russia, India, China) economy to have its rating reduced to junk status. On 11 June, the US rating agency Standard and Poor’s (S&P) released a report titled Will India be the first BRIC fallen angel?, warning of the possibility. The outlook on India’s rating had been reduced from stable to negative in April this year. The positive-negative-stable outlook that rating agencies use is like an early warning flag that tells the market what could lie ahead. A stable outlook says that the current sovereign rating of the country will not change in the next few months. A negative outlook means that there is a danger of the rating getting downgraded; the positive one is the reverse—the rating may get better. India moved to the investment grade rating in 2007 and has been stable at an S&P BBB-, but this changed in April with the stable outlook changing to negative. If India’s rating slides a notch, we move to the highest grade in the speculative grade ratings, or a BB+. It usually takes between six months and a full year before the outlook change translates into a rating change. The S&P report, coming so soon after the change in outlook, has taken the market by surprise.