Sensex, rupee recover after knee-jerk reaction to Rajan’s exit
The Indian equity benchmark indices opened the day in the red, the first trading session after Reserve Bank of India (RBI) governor Raghuram Rajan announced his decision to leave the central bank when his tenure ends in September.
The benchmark 30-share Sensex traded down more than 100 points during most part of the pre-open session. It opened at 26,497.11, down 128.80 points when compared to Friday’s close of 26,625.91. Interestingly, banking majors like ICICI Bank, State Bank of India (SBI), Axis Bank along with HDFC were among the top losers in the morning session.
By 10 a.m., the Sensex shifted marginally in the positive territory with a gain of nearly 70 points. It was trading at 26,693.63.
Further, the rupee opened weaker at 67.65 per dollar — which is close to one month low — as compared to previous closing of 67.07 as foreign funds pulled out.
However, it recovered about 20 paisa after the central bank seemed to have intervened in the foreign exchange market to curb volatility.
It was widely believed that the markets would see some amount of knee-jerk reaction after Mr. Rajan announced his decision on Saturday by way of a letter to RBI staffers. He was largely perceived as a pro-market and reform oriented central banker.
“This is a negative surprise as markets were expecting him to continue… Although the news is negative in the near term, we do not expect a lasting medium-term impact,” said global financial major Nomura in a note released on Sunday.
Interestingly, the fall in the Indian markets came amidst a positive trend in most of Asia.
Leading Asian indices like Hang Seng (Hong Kong), Nikkei (Japan) and Kospi (South Korea) were all trading up in the range of 1 to 2 per cent each.
The global markets have been trading cautiously in the recent past on concerns related to the possible exit of Britain from the European Union (EU).
Finance Minister Arun Jaitley spoke out against the fact that the Supreme Court is deliberating on the issue of Aadhaar Read more
The rupee slipped below the 66-level by tumbling 74 paise, or 1.11 per cent, to 66.50 against the US dollar Read more
The rupee weakened by 9 paise to 66.19 against the dollar in early trade, snapping its two-day winning run, on Read more
About 17,000 employees of the Reserve Bank of India are set to go on strike today for better retirement benefits Read more
