In contrast to what market mavens expected, the domestic market was quick to shrug off RBI governor Raghuram Rajan’s exit announcement with S&P BSE Sensex rising as much as 259 points, while Nifty50 scaling towards 8,250-mark.
The 30-share index did slip as much as 178 points in a knee-jerk reaction to Rexit, but quickly rebounded to return in green terrain. The index settled the day 241 points higher, while 50-share index ended at 8,238 level.
Below are four factors that came to the rescue of market as it braced itself to deal with Rajan’s no to the second term:
1) Brexit turns Bremain!
Market across the globe heaved a sigh of relief on Monday after a couple of polls released over the weekend showed the receding possibility of Britain leaving the European Union. Two polls suggested “In” regaining the lead and another showed the “Out” campaign’s lead narrowing.
2) Rain Gods smile, finally!
After a delay of about 10 days, Monsoon has finally arrived in drought-hit Marathwada as well as a major part of Maharashtra, said Indian Meteorological department. There were concerns that going against the forecast, monsoon may turn out to fall below average this season as well.
3) Govt relaxes FDI norms
Government on Monday relaxed Foreign Direct Investment (FDI) norms in a host of sectors including civil aviation, single-brand retail, defence and pharma by permitting more investments under automatic route. Reacting to the news, aviation, defence and pharma stocks logged solid gains in the trade today.
4) Hopes of rate cut in August policy
As Raghuram Rajan decided to pack his bags from RBI, supposedly on account of facing criticism on his hawkish stance on interest rates, speculation turned rife the next RBI governor may ease his/her stance on the same.
“New appointment could mean higher likelihood of further rate cuts,” said global brokerage Credit Suisse in a research note.