With regulators and stock exchanges keeping a close vigil, the benchmark Sensex staged a rally of 237 points to cross the 27,000-mark as investors across the world saw lesser chances of Britain leaving (Brexit) the European Union. The rupee also appreciated 23 paise to close at 67.25 against the US dollar on increased selling of the American currency by bankers and exporters. Even as millions of Britons began voting in the historic referendum that will decide whether the UK will continue or leave the 28-nation EU, the Sensex tended to look up in line with a firm global trend and hit a high of 27,060.98. The gauge finally ended 236.57 points or 0.88 per cent higher at 27,002.22, its highest closing since June 8. The NSE 50-share Nifty rose 0.81 per cent to close at 8,270.45. [related-post] Watch Video: What's making news Shares of companies with exposure to the UK saw revival in buying and rose by up to 3 per cent. Tata Motors rose by 3.28 per cent, Bharat Forge 2.03 per cent, Hindalco 1.52 per cent and Tata Steel 0.53 per cent. Shares of Dr Reddy’s Lab climbed 2.18 per cent. In the IT pack, Infosys gained 1.08 per cent and Wipro was up 0.12 per cent. Jayant Manglik, president, Religare Securities, said, “If Brexit happens, we could see some knee-jerk reaction in our markets but don’t expect any sustainable slide in Nifty index. In other words, the sudden decline might derail the current momentum in the index in the short run but overall bias would largely remain on the positive side. As of now, Nifty has been consolidating within 8,000-8,300 for last four weeks and chances of breakdown seems unlikely, considering the positive domestic cues like progress of monsoon and recent policy announcements by the government to expedite the pace of reforms.” Manglik said stocks of Indian companies which are operating in Europe, especially in the UK, may see a downtrend due to expected slowdown in the UK economy in case Brexit becomes a reality. The RBI and the Sebi which were keeping a watch on Brexit developments indicated they will take necessary steps including liquidity support to ensure orderly conditions in the financial markets. Sebi and stock exchanges have also beefed up mechanism to deal with any excessive volatility. Shreyash Devalkar, fund manager, BNP Paribas Mutual Fund, said, “Aided by an upmove in European markets, domestic bourses closed the day with gains of nearly 1 per cent. Opinion polls indicating that the “remain” camp in the UK was gaining momentum, helped prop up markets.” According to Vinod Nair, head of Research, Geojit BNP Paribas Financial, after a lukewarm start, the markets gained momentum in the later half as the positive opening in Europe kept investors optimistic on the ongoing EU referendum in the UK. “Appreciation in the rupee too added a positive sentiment. Further, the investors will keenly watch the US economic data today on new home sales, jobless claims, manufacturing data to find the economic stability in US.” According to a Bank of America Merrill Lynch analysis, a Brexit may create recession risks that could dent IT demand further, hurting the 10-14 per cent revenue growth forecast for the UK businesses of the Indian IT companies in FY17. Worse is the fact that the five large Indian IT companies have an 8-15 per cent revenue exposure to the British pound, the bulk of which is unhedged, it said.
