Britain voted for Brexit by 1.4 Million votes and the Nifty opened at gap down of around 225 points, the Indian rupee slid 1.07% against the dollar, the Sensex plunged 4.04% however recovered later and ended at 2.24% below.
Biggest losers were L&T – 4.26%, TATA STEEL – 6.37%, TATA MOTORS – 7.99%. There are few economic pundits who in fact declared that this may be end of globalization.
I don’t agree to what negative stuff I am reading since morning today.
I have solid reasons to support my argument and those are following:
- Indian Rupee has been again one of the most stable, If we compare the fall in the Indian currency relative to other currencies around the world. Due to Brexit, there is almost six percent reaction already in the Mexican peso. We have also seen the Turkish Lire moving significantly. It clearly signals that we are no outlier even amongst Asian Currencies.
Rupee may touch new lows against the US dollar in coming days; however it is very much visible that it will perform better than the Brazilian Real, Indonesian Rupiah, Korean Won and South African Rand.
- Today, it is not only the world’s largest major economy but also relatively insulated from wild global economic gyrations. India is the fastest growing economy. Almost all the major international rating agencies have improved their ratings about India’s outlook.
- Indian markets may suffer but the economy with its booming domestic consumption story, robust infrastructure pending may be among the first to recover quickly from this turmoil.
- Our exposure to global trade as a percentage of GDP is much lower than that of many major economies and that is a plus point for us. It means, even if the global trades derail for the time being, it’s not going to affect the GDP much.
- Equity market may remain under-pressure due to increased volatility. This volatility would put pressure on oil prices, which could help our country.
- RBI has already indicated that we have sufficient forex reserve and if needed, it can be liquidated to support our systems.
Let me tell you, we are not the only people to be positive about our country when the entire world looks worried after Brexit.
S Naren of ICICI Prudential AMC says, “We see Brexit as a buying opportunity in Long Term. We believe then Indian Economy is in comfortable position.”
Also Nilesh Shah, MD, Kotak MF says, “Due to India’s strong Fundamentals and a fiscally prudent govt., it will get more flows over a period of the time. Our markets ran ahead of fundamentals and hence this correction is healthy.”
If you ask me to even look towards the recent future incidents of global incidents –
The FED rate hikes are now no possibility. We are unlikely to see any aggressive Fed moves till the dust settles down. You must have seen how Gold rate are high since yesterday.
Britain, the world’s fifth biggest economy, has come out from the biggest monetary union the world has ever seen, breaking a relationship of almost 40 years.
London has been, in a way, the financial capital of the entire Europe and now the same looks doubtful so it’s a big event but the impacts the world is witnessing as of now are temporary headwinds.
Indian markets will look forward to progress of monsoon and passage of GST.
Now my question to you all is, when Indian market is not getting affected much why you are getting anxious?
Be relax, in fact it’s time for going for investments. Invest and chill feeling proud about the kind of strength our economy has gathered in last couple of years. Last One thing , No one has created fortune in stock market by watching macro economic events.