Brexit poll: What these 5 brokerages are saying on domestic markets movement

By: | Published: June 22, 2016 5:16 PM

Brexit poll: Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and stock exchanges have stepped up vigil to deal with any excessive volatility ahead of the ‘Brexit’ referendum, which is keenly awaited by the investors globally.

BSE Sensex - Brexit poll effectBrexit poll: Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and stock exchanges have stepped up vigil to deal with any excessive volatility ahead of the ‘Brexit’ referendum, which is keenly awaited by the investors globally.

Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI) and stock exchanges have stepped up vigil to deal with any excessive volatility ahead of the ‘Brexit’ referendum, which is keenly awaited by the investors globally. The UK government on June 23rd is holding a referendum to decide on European Union (EU) membership. It is important to understand if the UK public votes to leave the EU, the country will not necessarily do so immediately. According to the Treaty on European Union, leaving the EU will require the signing of treaties with the other EU member states and procedures within the UK itself, and the process will probably take around two years. If Brexit becomes a reality, then it will be the first case of any country leaving the EU, and because of the size of the areas where the impact of an exit cannot be estimated, there has been a marked rise in uncertainty on the financial markets. As the referendum nears, and opinion polls increasingly showing a split vote since the beginning of June, investors have been wavering between hope and fear over prospects of the UK leaving the EU or remaining in it.

We take a look at what these 5 brokerages houses are saying on expected domestic market’s movement if Brexit happens:

Nirdosh Gaur, MD and CEO, Moneypalm
India along with Global markets will be impacted from Brexit as Indian companies are major investors in Britain and their current and future plans of investments can get hurt. Capital Inflows to India will also get hurt in near future because investors will look for safer assets like Gold and US Bonds.

Mustafa Nadeem, CEO, Epic Research
Brexit is a concern and it has been on the sideline for past 1 year and now comes in the spotlight. The major concern which is that it started when global markets were worst hit and now in fore when we are seeing buying with most Indices trading near highs. With That the polls now show a difference between “leave” and “remain” is narrowed down to decimals. That bring a stretch on eyebrow of many analysts/ investors and traders. Many decisions of world economies have been hold due to this event as the gap is narrowed in the poll. The impact can be huge as the volatility we have seen in equity markets increasing. The precious metals have already seen a nice run up and are poised for further up move. The event will signal capital outflow from Britain, in case of Brexit, and Euro as well while market rotation and tactical allocation will be the key to survive.

Mahesh Nandurkar, CLSA India Strategist,
The immediate near-term impact is negative for rupee and equity markets, especially in the context of the upcoming Brexit worries and large US dollar outflow worries as NRI deposits mature. “We continue to maintain our cautious view on the market owing to the mismatch between valuations and fundamentals.”

G Chokkalingam, Equinomics Research
Indian markets would largely remain insulated from Brexit event. European economy which has already slowed down its growth over last few years hasn’t increased capital exports to india substantially. So Indian markets would to a large extent remained insulated from Brexit. India companies operating in Europe, especially in UK could see some slowdown in business.

Dipen Shah, senior vice-president and head private client group research, Kotak Securities
A ‘Brexit’ scenario has the potential to create volatility in global markets, especially in the currency markets.

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