New Delhi (PTI): Signing of the nuclear deal with the US may boost in the global financial market India's credit worthiness which, otherwise, faces prospects of turning 'negative' from 'stable', according to Moody's assessment.

"By limiting India's dependence on imported hydrocarbons and strengthening as well as diversifying its power generation capabilities, the nuclear deal could offer medium-term support to the ratings," the global agency said.

However, it felt that it was not clear whether the deal may materialize quickly or smoothly enough to offset prolonged fiscal policy shortcomings.

It also said the support factor to credit rating "will be weighed against more imminent challenges that are derived from external shocks and lack or a more prudent, flexible and resilient fiscal framework."

Higher oil prices and lack of fiscal policy response are putting the burden of macroeconomic adjustment on monetary authorities.

This declaration in fiscal situation may force the country's sovereign ratings from 'stable' to 'negative', Moody's warned.

Having won a confidence motion in Parliament, the coalition government has also received for India, the crucial IAEA approval for the safeguard agreement.

The agency said the reluctance to absorb the oil price shock and not regard as a significant above the-line fiscal event have led to RBI stepping in with foreign exchange reserve to smoothen out the volatility.