Raghuram Rajan says no to second term; markets, rupee may face some heat

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New Delhi | Published: June 18, 2016 8:19:36 PM

Domestic equity markets may see some action on Monday after the Reserve Bank of India (RBI) chief Raghuram Rajan on Saturday announced that he is not going to serve his second term as the central bank’s governor after September 2016.

rbi monetary policy, rbi monetary policy 2016, rbi monetary policy june 2016, Raghuram Rajan, Raghuram Rajan repo rate cut, Raghuram Rajan policy, rbi policy 2016“Raghuram Rajan exit from the central bank is also negative for Indian rupee.” he added. Rupee on Friday closed 3 paise higher at 67.17 against dollar, according to the data available with RBI. (AP)

Domestic equity markets may see some action on Monday after the Reserve Bank of India (RBI) chief Raghuram Rajan on Saturday announced that he is not going to serve his second term as the central bank’s governor after September 2016.

Benchmark indices, which were looking for some cues from the referendum on Britain exit from the European Union next week may face some heat after the news.

The BSE Sensex on Friday closed 100.45 points up at 26,625.91, while the NSE Nifty index settled 29.45 points up at 8,170.20.

According to market experts banking stocks will also remain in limelight on Monday after the announcement made by Rajan.

The Nifty Bank index on Friday settled 0.14 per cent up at 17,696.

“The news of Rajan exit from the central may put pressure on Indian equity markets and we may see gap down opening on Monday and it will also lead to higher volatility in upcoming trading sessions.

Nifty may move towards the crucial level of 8,070 levels,” said Chandan Taparia, analyst, equity research, Anand Rathi Financial Services.

Ambareesh Baliga, independent market analyst seconds Taparia and believes market may open in red on Monday.

“Raghuram Rajan exit from the central bank is also negative for Indian rupee.” he added. Rupee on Friday closed 3 paise higher at 67.17 against dollar, according to the data available with RBI.

“Meanwhile, any positive statement from the government can cap the downside on Monday,” said Baliga.

Rajan took over as the RBI governor at a time when India’s inflation was above 10 per cent and the Indian rupee was staring at a crisis.

Not only did he hike rates to tame inflationary expectations, Rajan also took a number of steps to stem the rapid depreciation of rupee – opening a swap window for deposits from NRIs, being one of them.

Cheering his appointment, stock markets had in 2013 reacted positively with the BSE Sensex surging 1,430 points, or 7.70, in four trading sessions.

The index soared from 18,567.55 on September 3, 2013 to 19,997.45 on September 11, 2013.

Ramesh Damani, member, BSE in an interview to ET Now said, “Markets may be bracing for a very volatile week.”

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