India shrugs off Brexit fears; here’s how

By: | Updated: June 24, 2016 6:53 AM

The equity and currency markets displayed little sign of nervousness on Thursday as the referendum in Britain on remaining or leaving the European community (EU) got under way.

Indian rupeeThe rupee strengthened against the dollar, much like other Asian currencies, including the Malaysian ringgit and the South Korean won. (Reuters)

The equity and currency markets displayed little sign of nervousness on Thursday as the referendum in Britain on remaining or leaving the European community (EU) got under way. While stocks started off the day on a tentative note, investors appeared to have shrugged off their concerns later in the day after European markets opened higher. The Sensex soared 236.57 points or 0.9% to end the session at 27,002.22.

The rupee strengthened against the dollar, much like other Asian currencies, including the Malaysian ringgit and the South Korean won. The currency put on 0.3% to hit 67.25, rising for the second successive day. The yield on the benchmark government bond remained virtually unchanged at 7.479%. Foreign portfolio investors remain cautious, not having taken on too much risk in the last four sessions since Reserve Bank of India governor Raghuram Rajan said he would not be seeking a second term; in June, they have bought stocks worth around $630 million so far.

However, they were buyers in the bond market too, picking up debt worth $16.6million, data from SEBI showed.

Bloomberg reported that stocks gained and the pound strengthened to its highest level this year as two polls conducted before Thursday showed a lead for the campaign to keep Britain in the European Union. European shares rose to the highest level in more than two weeks in above-average trading with voting underway in the UK’s referendum. The S&P 500 Index climbed within 1.5% of its all-time high. A gauge of sterling strengthened for a second day and commodities rallied with emerging markets. Gold and the yen declined, while perceived corporate credit risk fell for a fifth day, Bloomberg reported.

Meanwhile, regulators including the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) are understood to be prepared for any unusual volatility in the currency and stock markets,
respectively.

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