Focus on rupee as markets gear up for rexit

1. Focus on rupee as markets
gear up for Rexit

2. Contd…
Dalal Street investors are readying for a lower opening of the Sensex on
Monday as a knee jerk reaction to RBI governor Raghuram Rajan's decision
to not continue in his post after his term ends early September. However, the
main concern for the Street is the rupee, and not bonds or stocks, market
players said. The negative sentiment stemming from Rajan's exit is expected
to be aggravated by the already volatile global market which is currently
weighed down by Brexit next week. And on the domestic front the delay in
monsoon and the ensuing maturity of foreign currency deposits worth about
$20 billion are expected to weigh on investor sentiment, they said.
“The announcement came at the worst possible time. On one hand we have
the Brexit next week, the rains are yet to come and the global and domestic
markets are volatile now,“ said Dharmesh Mehta, MD, Axis Capital. Despite
substantial vola tility, the last week's closing level for Sensex at 26,626 was
just 10 points lower from its previous weekly close.

3. Contd…
This was due to various positive and negative factors which impacted
the market. In the coming week too market players see the trend
continuing.
Institutional dealers said that foreign investors, largely, will be
disappointed to see Rajan go. And this could lead to some selling early
on Monday . However, going forward they would be closely watching at
the direction of the monetary and banking policies.
“Investors will be looking at continuity of the policies which have
improved India's macro-economic stability (in the last few years).RBI's
focus on bringing down inflation has given a lot of confidence to
investors,“ said Nilesh Shah, MD, Kotak Mutual Fund.

4. Contd…
“They'll be looking at an independent RBI continuing the same
policies,“ Shah said.
According to Arun Kejriwal, director, KRIS, an investment advisory firm,
there will always be a knee jerk reaction to such a statement. According
to a former head of institutional dealing at a foreign brokerage, FIIs
definitely had high regards for Rajan and his policies, and also the way
he went about cleaning the country's `tricky' banking system, so there
could be some selling by foreign fund managers.

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