Key equity indices Sensex and Nifty on Monday morning opened in red following Reserve Bank of India Governor Raghuram Rajan saying no to a second term.
The 30-scrip Sensitive Index (Sensex), was trading 139.34 points or 0.52 per cent lower during the initial morning session.
WATCH VIDEO | Keystrokes: No Second Term For Raghuram Rajan
The wider 51-scrip Nifty of the National Stock Exchange (NSE) was also trading 56.95 points or 0.70 per cent lower at 8,113.25 points.
The Sensex of the BSE, which opened at 26,497.11 points, was trading at 26,486.57 points (at 9.16 am) in the early session, lower 139.34 points or 0.52 percent from the previous day’s close at 26,625.91 points.
9.34 am: Sensex recovers almost 200 points from opening lows, now at 26,644.99 points +0.07%; Nifty recovers 60 points from opening lows, now at 8167.30 -0.04%
9.30 am: Sensex down 17.65 points, now at 26,608.26; Nifty at 8,156.55, down 13.65 points
9.22 am: Nifty recovers 30 points from opening lows, now at 8137.30 -0.40%
9.20 am: Sensex recovers 100 points from opening lows, now at 26,544.76, down 81.15 points, Nifty at 8140.65 -0.36%
9.15 am: Nifty Midcap 100 13254.50 -0.78%: BSE Small Cap 11379.99 -0.48%
Nifty Bank 17541.50 -0.87%: BSE Bank Index 20050.27 -0.96%
9.10 am: Sensex opens 153.40 pts lower, currently at 26472.51; Nifty at 8111.10
9.07 am: Rupee slumps 60 paise to 67.68 per dollar
Watch Video: What’s making news
Geojit BNP Paribas’ Chief Investment Strategist V K Vijayakumar said Rajan’s decision is indeed “bad news” and comes at a wrong time when the global economy is concerned about the consequences of a possible exit of the UK from the European Union.
“The currency market and the stock market will be impacted negatively when they open on Monday… We feel the initial knee jerk reaction of the market will be short lived because India’s macros are in a sweet spot,” he noted.
Experts also opined that the domestic economy and the RBI have the strength to overcome the initial negative impact.
SAMCO Securities CEO Jimeet Modi said Rajan’s decision not to seek a second term would create an emotional shock.
“We also believe the markets are mature enough to assimilate the fact and move on. It may create a knee jerk reaction in the short term,” he said.
After witnessing volatile trading sessions, the 30-share benchmark Sensex shed 9.84 points to close at 26,625.91 points in the week ended June 17.
Deputy Governor Urjit Patel, former CAG Vinod Rai, SBI chief Arundhati Bhattacharya, Chief Economic Advisor Arvind Subramanian, World Bank Chief Economist Kaushik Basu and Economics Affairs Secretary Shaktikanta Das were among those being speculated as possible contenders.
Eminent economists said the government letting Rajan go would be seen by the world as India’s non-approval to a policy against inflation and bad loans, while former Finance Secretary Arvind Mayaram said it would be “very costly for the economy” and was not a “good omen”.
Attacking the government for Rajan’s decision against a second term, main opposition party Congress alleged that some BJP and RSS leaders were lobbying against him and called it the “most unpleasant thing” for the country.
BJP MP Subramanian Swamy, who ran a tirade against Rajan, took a jibe at the outgoing Governor saying whatever “fig leaf” he wants for hiding the reality, the people should not grudge it and wish him ‘good bye’.
Stating that he would always be available to serve the country when needed, Rajan had yesterday said he was “open to seeing” through his unfinished work on containing inflation and cleaning up the books of banks, but said no to a second term “on due reflection, and after consultation with the government”. This was seen by some as indication that he could have been interested in a second term.