Indian Markets Bear Brunt of Brexit Poll, Industry Experts React

The Indian markets saw a significant decline during EU poll. (Photo: iStockphoto)

In a historic development, the UK has voted to leave the European Union after 43 years as the Brexit camp took a seemingly unassailable lead over the ‘Remain’ camp in a down-to-the-wire referendum with far reaching implications for the world.

Tata owned Jaguar Land Rover, Britain’s biggest carmaker, has estimated its annual profit could shrink by 1 billion pounds ($1.4 billion) by 2020 if Britain returns to World Trade Organisation rules for trade with Europe.

As a result of the Eu referendum, shares of Tata Motors slumped by 12.9 percent.

Stocks With Links to UK Tumble

The benchmark Bombay Stock Exchange (BSE) Sensex traded with a heavy losses on Friday.

Shares of companies with exposure to the United Kingdom witnessed massive selling pressure in early trade, plunging up to 13 percent, following the UK’s vote to exit the European Union. Tata Steel tanked 10.89 percent on BSE as reports from the UK showed Britain voting against remaining in the EU bloc.

Shares of Hindalco declined 9.44 percent, Bharat Forge tumbled 8.76 percent and Dr Reddy’s Lab slipped 2.64 percent. These stocks were the worst hit among the 30-Sensex bluechips during the morning trade.

Brexit to Impact IT Industry in Short-Term

From the IT pack, TCS was the worse hit, which went down by 4.81 percent, while Infosys fell by 4.33 percent and Wipro dipped 2.77 percent.

The impact of Brexit will certainly be negative in the short-term on account of volatility in the exchange rate, uncertainty in the markets and the terms on which Britain will leave the EU.

R Chandrashekhar, President, Nasscom

BloombergQuint on Brexit’s Impact on India

Indian markets are falling sharply in line with global peers, after Britain voted to exit the European Union. Sensex is down over 900 points, while the Nifty is trading below the 8,200.

BloombergQuint spoke to a host of market experts on the way ahead for the Indian markets:

Daljeet Kohli, Head of Research, India Nivesh

• Brexit was a surprise, markets were building in ‘Bremain’ scenario.
  
• Don’t be in a hurry to buy. Wait for the froth to settle down.
  
• Contingent effect of Brexit can be large.
  
• Market not available at bargain currently.
  
• Nifty will become attractive at 7,200-7,500 levels.
  
• Time to be bold in IT stocks. They will benefit from dollar strength and rupee depreciation.

Parag Thakkar, Head - Institutional Sales, HDFC Securities

• It’s a known event, regulators and market watchers are prepared.
  
• IT stocks, Aurobindo, Tata Motors have higher UK exposure.
  
• Will look for buying opportunity in Lupin if it falls 4-5 percent due to this fear.
  
• Indian markets may decline further given that our markets are down only 2-3%. We advise investors to wait and watch before they start buying stocks.

(With agency inputs.)