Economy Reacts Positively To Rajan’s Exit; SENSEX Gains 241 Points

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Sensex rebounds 241 points, Nifty reclaims 8,200 on FDI norms, easing Brexit fears

The S&P BSE Sensex closes 0.91%, or 241.01 points, higher at 26,866.92, while the Nifty 50 closes 0.84%, or 68.30 points, higher at 8,238.50

Recovering from its early morning plunge, the S&P BSE Sensex on Monday soared 241 points as Rajan was removed as RBI Governor and the government unleashed a new wave of FDI (foreign direct investment) reforms and Brexit worries eased while hectic buying by institutions and talking-up by influential marketmen helped counter Rexit jitters.

The rupee trimming its initial losses against the American currency too supported the rebound in equities. Sentiment got a further boost after global rating agency Fitch allayed concerns of any impact on India’s sovereign ratings due to Reserve Bank of India (RBI) governor Raghuram Rajan’s decision against a second term saying “policies are more important than personalities” on this front.

Meanwhile, RBI bought government’s securities worthRs.10,000 crore via open market operations purchase auction held on Monday, while the total amount offered by participants stood at Rs.45,922 crore.

In sweeping reforms, the government has decided to ease FDI norms in civil aviation, single-brand retail, defence and pharma by permitting more investments under automatic route.

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.