Raghuram Rajan exit: Sensex, Nifty recover from lows; rupee cuts losses

The Indian markets held the ground on Monday morning, brushing aside the concerns about the likely impact of RBI governor’s exit. The Sensex and Nifty opened down about 0.6 percent but recouped the losses quickly as investors bought at the lower levels pushing the indices into the green territory.

In the run-up to the market opening, there were fears that the stocks and forex markets are likely to react negatively after RBI governor Raghuram Rajan said that he will not take a second term at the central bank.

The rupee opened 0.6 percent lower at against dollar but quickly recouped most of the losses. According to a Reuters report, the central bank is likely to have sold dollars via PSU banks starting 67.70. At 9:55 am, the rupee was at 67.4300, down 0.35 percent against the dollar, Sensex at 26,694.14, up 68.23 or 0.26 percent, and Nifty at 8,186.05, up 15.85 or 0.19%.

The sectoral indices were also pulled up partially from the day’s losses as Bank Nifty stood at 20204.66, after hitting a low of 19,944.42 earlier.

Investors’ sentiment was explained by ace investor Rakesh Jhunjhunwala today, when he told the CNBC-TV18 that what the market should be more worried about is the Brexit - - the exit of the UK from the European Union - and monsoon.

“We should not forget that the policies are going to continue. Nothing really change whether Rajan is there or not… Rajan is not the only man in India who will bring in continuity,” he told the TV channel. Praising Rajan’s initiatives, Jhunjhunwala said his legacy will continue.

What might have also helped the markets is the waning fears of the Brexit. Asian stocks gained as some fears that Britain would vote to leave the European Union abated on Monday, boosting a recovery in both sterling and investors’ taste for risk assets, said Reuters.

Safe-haven assets and currencies like gold, government bonds and the yen retreated.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1 percent. Australian stocks added 1.2 percent and South Korea’s Kospi rose 1.1 percent. Japan’s Nikkei climbed more than 2 percent, helped by a retreat in the recently bullish yen.