The BSE Sensex and NSE Nifty fell in the opening trade on Monday following investors’ anxiety over Raghuram Rajan’s decision to not renew his term after September 3, 2016 as RBI Governor. Reacting on the news, the 30-share index Sensex slumped over 150 points in opening trade, while the 50-share index Nifty traded below 8,120.
However, the markets recouped later and were back in positive terrain after sentiments got some support from the quick progress of monsoon in last couple of days. At 12.25 pm, Sensex was trading 123.14 points up at 26,749.05, while NSE Nifty was trading 34.85 points up at 8,205.05.
Monsoon finally arrived in drought-hit Marathwada as well as a major part of Maharashtra after a delay of about 10 days. Monsoon arrived in many parts of Maharashtra on Sunday and by now it is active in 90 per cent of Maharashtra, ANI quoted Mumbai MeT Department.
Earlier this month, the India Meteorological Department (IMD) had stated that there is no possibility of a “deficient” monsoon this year and 96 per cent chances are that the rainfall would be “normal to excess”. IMD has stated that the quantum of rainfall during June 1-June 18 has been 59.7 mm against the normal range of 78.7 mm thus making it 24 per cent less than the benchmark. However, a Met department official said that the monsoon had entered Kerala coast only on June 8 against the usual date of June 1, thus showing a large deviation from normal benchmark.
The Finance Ministry expects the country’s growth rate to climb to 8 per cent in the current financial year on the back of above normal monsoon. Economic affairs secretary Shaktikanta Das expressed hope that the likely passage of Goods and Services Tax (GST) Bill in Parliament would further add to the business sentiment, fuelling growth.
Experts have also said that more than Rexit- a term used for Raghuram Rajan’s exit as RBI Governor- Brexit, GST passage and monsoon progress will affect the stock markets sentiments. Ace investor Rakesh Jhunjhunwala while reacting on Raghuram’s Rajan exit news to CNBC TV18 said that markets will make a U shape recovery and look for cues from Brexit, monsoon progress and GST.
Ajay Bodke, CEO and chief portfolio manager-PMS, Prabhudas Lilladher supports Jhunjhunwala views and said it is neither ‘Rexit’ or ‘Brexit’ but ‘RainExit’ that should be worrying investors more as nearly 60 per cent of Indians still depend on agriculture and allied activities and with two successive monsoon failures the need for a normal monsoon to kick-start rural demand cannot be under underestimated. He further added, “We have already seen a 25 per cent deficiency in rains till 15th June 2016 although IMD as well as private weather forecasters are unanimous that July-Aug-September will see copious rains and overall we would have an above-normal monsoon.”