If British voters decide to exit the EU, there could be a flight of capital from emerging markets to safer havens like the dollar and gold.
Rajan’s decision to not continue at the helm of RBI is likely to be met with a thumbs down from investors in the short term, said Luke Spajic.
A sell-off in the Indian stock market and a weaker rupee will be the immediate takeaways from Rajan’s decision, said Mohamed El-Erian.
Rexit: FIIs likely to react negatively, may cut exposure if rupee falls in response to Raghuram Rajan’s move
Rajan’s decision is likely to unsettle investors, who are sanguine about India in an uncertain global environment due to its macro-economic stability.
Britain’s referendum on June 23 is one of the keenly watched global events in the near term as a vote in favour of leaving the EU is expected to lead to volatility in global markets.
Joshi said India may not outperform EMs this year and advises sticking to defensives as key events in the near term may lead to risk aversion in markets.
Banks have been given the option of converting the unsustainable debt, which cannot be serviced with cash flow, into equity.
Options trading in the Indian market has seen rapid growth in the last few years and accounts for more than 78% of the approximately Rs 1.4 lakh crore daily volume on NSE.
“If Brexit happens, it can lead to volatility in the global markets as it is something that the market has not factored in,” said Mahesh Patil, co-chief investment officer at Birla Sun Life Mutual Fund.
The target implies an upside of 10.46% from current levels. The 30-stock Sensex was down 58.27 points or 0.2% at 26705.19 points.
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