According to leading ratings agency Crisil, India Inc's credit quality was peaking with the upgrades outnumbering downgrades in 2010-11.
The ratings agency upgraded the ratings of 605 companies and downgraded 269 in the last fiscal on a base of around 6,200 companies that it rates, it stated in a statement issued in Mumbai.
This had resulted in an improvement in Crisil's modified credit ratio (MCR- an indicator of the relative frequency of upgrades and downgrades) to 1.10 times in 201011 from 0.93 times in 209-10.
However, the ratings agency says going forward the MCR is not expected to improve further because of a number of pressure factors at play.
It added that the pressures from increasing commodity prices and interest rates seen in the last six-months are expected to continue in the medium-term which could also see intensifying competition.
"The vulnerability of corporates on this account is indicated by the proportion of negative outlooks -- 7.6 per cent of total outlooks as of March 31, 2011." It specified cement, chemicals, construction, automobile and textile spinning as the sectors where the pressures could be witnessed.
The agency added that external factors that needed to be watched are the rising oil prices due to unrest in the Middle-East and North Africa, and interruption in trade and investment, due to unexpected developments in developed economies supported by stimuli.