Rexit: Markets rise 200 points after falling close to 200 points
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After crashing 200 points in early morning trade, the Nifty and the Sensex jumped nearly one per cent owing to hectic buying by some institutions and soothing voices from rating agency Fitch and some prominent marketmen, while fading Brexit worry too aided the sentiment, said a report in The Hindu.
At 2.25 p.m., the 30-share BSE index was up 220.33 points or 0.83 per cent at 26,846.24 and the 50-share NSE index Nifty was up 64.45 points or 0.79 per cent at 8,234.65.Among BSE sectoral indices, IT index was up 1.94 per cent, Tech 1.9 per cent, Realty 1.38 per cent and capital goods 1.31 per cent.
Top five Sensex gainers were Tata Motors (+2.84%), Bharti Airtel (+2.74%), Tata Steel (+2.72%), Infosys (+2.33%) and TCS (+2.06%), while the major losers were Axis Bank (-0.82%), Lupin (-0.51%), Asian Paints (-0.48%), Coal India (-0.38%) and HDFC (-0.35%).
Early trade
The stock market benchmark index Sensex was down at 26,438 points in pre-open trade between 9-9.15 am, down nearly 200 points from its previous close on RBI Governor Raghuram Rajan's decision to quit once his term comes to end in September, but early morning buying orders helped limit the opening loss at 178 points.
Hectic buying thereafter helped the Sensex return to positive territory within minutes and the index was trading higher by over 130 points, touching an intra-day high of 26,830.48 points.
DII buying
Market-men said some big domestic institutions could have been pressed into buying to check the losses, as turnover was relatively higher in early morning trade for a Monday. Seeking to allay the concerns, government sources said that a successor would be announced well in advance to replace Rajan after he demits office at the end of his current three-year tenure on September 4 to help smoothen the transition.
Several prominent marketmen, including ace investor Rakesh Jhunjhunwala, said in their commentaries before and during the trading hours that Rajan’s exit should not be a major worry for the markets as right policies are in place.
Fitch allays concerns
However, the biggest soothing voice came from global rating agency Fitch which sought to allay concerns of any impact on India’s sovereign ratings due to Rajan’s exit, saying “policies are more important than personalities” on this front.
Fitch Ratings said it recognises Rajan’s contribution in setting significant policy changes in motion and said the new Governor will inherit a solid basis.
'Rockstar' RBI Governor
Rajan, a former IMF chief economist who is credited to have predicted the 2008 global financial crisis, has been often hailed as the ‘rockstar’ central bank Governor ever since becoming RBI Governor in September 2013 and for containing rupee volatility amid global market uncertainties.
For India, Fitch Ratings has ‘BBB—’ rating —— the lowest investment grade rating just a notch above junk grade —— with a stable outlook and has forecast 8 per cent GDP growth for 2016-17. Other agencies also have similar ratings for India and any tinkering with these ratings generally results in huge impact on rupee and stocks.
Meanwhile, the regulatory authorities and stock exchanges had beefed up their risk management and surveillance mechanism to address any eventuality today, while a close vigil was mounted for manipulators seeking to exploit the volatility. Marketmen said the new polls showing Britain remaining in the European Union also helped allay investor concerns.
