Brexit

Brexit: How does it impact India? Here are a few answers As far as Britain is concerned, the die has been cast and its people wish to go it alone rather than be restricted by being part of the European Union. The issue was closed with PM David Cameron announcing he will be quitting as he had campaigned for Britain to remain in the European Union. Reactions have been many and varied. Some have predicted doom for the country, others have said there will be minimal impact, if any, while others have said that it will actually gain. Indian markets have reacted in a knee-jerk manner and plunged as much as 1,000 points even as gold prices rose 5.74% as investors ran for safe heavens. Here we cut through the mist and provide top Indian experts quotes about the Brexit issue: Arundhati Bhattacharya, Chairman, SBI: Uncertainty of any sort results in volatility and Brexit will be no exception. As risk aversion sets in, there would be a decline in Financial Markets and India would see this impact along with other nations. However as trade strategies are reworked there could be potential advantages in the form of better market access for India to EU & UK. Sunil Kumar Sinha, Principal Economist, India Ratings & Research: From India’s perspective Brexit will have both positive and negative impact. As Brexit will vitiate the already uneven and fragile global recovery, it will exert downward pressure on global commodity prices and India will benefit being a net commodity importer. However, with risk rising in the global financial market foreign capital will flow out putting pressure on rupee to depreciate and making Indian financial market volatile. A number of Indian corporates having exposure to Europe/UK either through trade or in case their production units are located there would be adversely impacted. Rohit Gadia, CEO, CapitalVia Global Research: UK is the one of the largest contributors of the income of EU. Which is spent on administration, providing various grants. A British exit will impact EU revenue. Followed by Britain now more nations may want to exit from the union. Along with pound, rupee is expected to fall against dollar. We don't see any long term negative effect in Indian market. India being one of the most open economies in the world uncertainty in EU is a chance for investment to be routed to India now. However, Britain being the gateway of India to EU, ease of doing business with EU will be hampered. Jimeet Modi, CEO, SAMCO Securities: While markets are jittery, this is a god-sent event, especially for Indian investors. While we saw a steep fall in the indices, the trajectory of Indian markets remains upwards. After some stability, which will come next week, investors should lap up good quality stocks which will be available at good prices. IT & other companies which have significant revenues from Europe and UK will be affected and may be avoided as the extent to which the Pound will be impacted will be unknown. Focusing on Indian consumer goods like ITC, HUL and Asian Paints, BFSI stocks like HDFC Bank, Kotak Bank and Bajaj Finserv can lead to good returns for investors. Ajay Bodke, CEO & Chief Portfolio Manager - PMS, Prabhudas Lilladher: Brexit would trigger fears of centrifugal forces getting unleashed. Other disgruntled members of the EU who are unhappy with the functioning of what they perceive to be an overbearing & opaque decision making apparatus of Brussels-based bureaucrats would demand similar referendums from their national governments. This would be vehemently opposed by the governments in Germany & France who are advocating an ‘ever closer union’. 3 reasons why Sensex plunged over 1,000 points in Friday’s trade Benchmark BSE Sensex plunged by over 1,000 points and Nifty breached the psychological level of 8,000 in the morning trade on Friday. At 10.10 am, the 30-share index was trading 934.19 points, or 3.46 per cent, down at 26,068.03, while the 50-share index was trading 298.20 points, 3.61 per cent down at 7,972.25. Sensex opened the day at 26,367.48 and has touched a high and low of 26,367.48 and 25,989.41, respectively, in trade so far. The index was at 27,002.22 on Thursday. Likewise, Nifty opened at 8,029.10 and has touched a high and low of 8,058.45 and 7,952.20, respectively, in trade so far. Also Read: Sensex falls over 1,000 points on Brexit worries Below are three reasons why domestic equity markets are under pressure in today's trade: 1) Weak Global Cues: Heavy selling pressure hit to world markets on Friday as UK referendum suggested that Britain is on the verge of leaving the European Union, threatening the existent of the entire bloc and its single currency. 2) Rupee: Indian Rupee crashed by 96 paise to breach the 68-level against the US dollar in the early trade as leads show 'Leave' camp ahead in the UK referendum vote. 3) On the domestic front, companies having some exposure in the UK markets were trading in red with Tata Motors falling nearly 13 per cent intraday. It put further pressure on Indian equity markets. Factbox: The consequences of the Brexit referendum BRUSSELS (Reuters) - Britain is expected to submit an application to leave the European Union following Thursday's referendum, after which it would have two years to negotiate an exit. Below are possible consequences for Britain and the EU of a Brexit. ECONOMY Britain would no longer be subject to EU budget rules, which limit a government's budget deficit to 3 percent of gross domestic product and public debt to 60 percent of GDP. It could therefore run whatever budget shortfall it wants without admonishment from the European Commission and other EU ministers. It would also be free from the Commission's monitoring and advice on future actions. FINANCE Financial services firms based in Britain, from banks to clearing houses and funds, could lose their money-spinning EU "passports", which allows them to sell services across the 28-nation bloc with low costs and a single set of rules. The passporting system has contributed to making London one of the world's most important financial centres. Some American, Japanese and other non-European banks that have European headquarters in London have said they would consider moving parts of their business inside the European Union, in the event of a Brexit. TRADE The rest of the EU has a trade surplus in goods of about 100 billion euros ($110 billion) with Britain, while Britain exports some 20 billion euros in services than it imports, principally due to financial services. Brexit campaigners say if would be in the EU's interest to agree a free trade deal with Britain even if it leaves the bloc. However, there tends to be more of a focus on goods than services in free trade deals. Switzerland, where financial services are a larger share of GDP than in Britain, has no general access to EU financial service markets and runs a financial services trade deficit with the bloc. COMPETITION British companies acquiring EU peers would still need approval from the UK competition watchdog and the European Commission, resulting in more legal costs and the risk that each delivers a different ruling. Britain will have a free hand to aid ailing companies or industries without fear of EU action but it will also not be able to oppose subsidies granted by EU governments to their own national champions. ENERGY Leaving the EU could make UK energy infrastructure investment costlier and delay new projects at a time when the country needs to plug a looming electricity supply gap. The uncertainty after Brexit could make energy investors demand higher returns for the risk of less favourable conditions. Oil and gas majors BP and Shell are among energy companies who warned about the potential downside. CLIMATE Britain is the second-largest emitter of greenhouse gases in Europe and its utilities are among the largest buyers of carbon permits in the EU Emission Trading System (ETS). Although most analysts believe Britain will remain in the cap-and-trade scheme, the vote is viewed as bearish for the market as Britain would no longer be able to drive tough reforms to drive up the price. Brexit would also disrupt the bloc's plans to share out the burden of its Paris climate change pledge. The environmentally minded also worry that EU climate targets would be less ambitious without British leadership to balance against more reluctant member states such as coal-dependent Poland. AVIATION A Brexit could call into question EU agreements on open airspace that have granted the region's airlines unlimited access to the skies of fellow member states, benefiting both UK and EU airlines. It would also affect transatlantic routes because of the EU-U.S. Open Skies agreement, which gives British airlines unlimited flying rights to the United States. FOREIGN POLICY Along with France, Britain is the leading foreign policy power in the European Union, boasting a large military and close ties with the United States. After a Brexit, Washington has made clear it will be less interested in London as an ally because of a perceived loss of influence. Britain would no longer be bound by joint EU positions, for instance on economic sanctions against Russia. Britain would remain a member of NATO. JUSTICE AND HOME AFFAIRS Britain has multiple exemptions from justice and home affairs policies, notably not being part of bloc's Schengen zone of free travel. It is not clear what restrictions Britain might place on foreign arrivals. The EU has vowed to respond in kind. Britain currently recognises other EU members' arrest warrants, exchanges police information, including personal data, and is a member of the bloc's police agency Europol. Its future involvement, including access to EU databases, could diminish, meaning less cooperation on policing and fighting crime. ($1 = 0.9075 euros) (Reporting by Brussels newsroom; Editing by Pravin Char) Factbox: The consequences of the Brexit referendum BRUSSELS (Reuters) - Britain is expected to submit an application to leave the European Union following Thursday's referendum, after which it would have two years to negotiate an exit. Below are possible consequences for Britain and the EU of a Brexit. ECONOMY Britain would no longer be subject to EU budget rules, which limit a government's budget deficit to 3 percent of gross domestic product and public debt to 60 percent of GDP. It could therefore run whatever budget shortfall it wants without admonishment from the European Commission and other EU ministers. It would also be free from the Commission's monitoring and advice on future actions. FINANCE Financial services firms based in Britain, from banks to clearing houses and funds, could lose their money-spinning EU "passports", which allows them to sell services across the 28-nation bloc with low costs and a single set of rules. The passporting system has contributed to making London one of the world's most important financial centres. Some American, Japanese and other non-European banks that have European headquarters in London have said they would consider moving parts of their business inside the European Union, in the event of a Brexit. TRADE The rest of the EU has a trade surplus in goods of about 100 billion euros ($110 billion) with Britain, while Britain exports some 20 billion euros in services than it imports, principally due to financial services. Brexit campaigners say if would be in the EU's interest to agree a free trade deal with Britain even if it leaves the bloc. However, there tends to be more of a focus on goods than services in free trade deals. Switzerland, where financial services are a larger share of GDP than in Britain, has no general access to EU financial service markets and runs a financial services trade deficit with the bloc. COMPETITION British companies acquiring EU peers would still need approval from the UK competition watchdog and the European Commission, resulting in more legal costs and the risk that each delivers a different ruling. Britain will have a free hand to aid ailing companies or industries without fear of EU action but it will also not be able to oppose subsidies granted by EU governments to their own national champions. ENERGY Leaving the EU could make UK energy infrastructure investment costlier and delay new projects at a time when the country needs to plug a looming electricity supply gap. The uncertainty after Brexit could make energy investors demand higher returns for the risk of less favourable conditions. Oil and gas majors BP and Shell are among energy companies who warned about the potential downside. CLIMATE Britain is the second-largest emitter of greenhouse gases in Europe and its utilities are among the largest buyers of carbon permits in the EU Emission Trading System (ETS). Although most analysts believe Britain will remain in the cap-and-trade scheme, the vote is viewed as bearish for the market as Britain would no longer be able to drive tough reforms to drive up the price. Brexit would also disrupt the bloc's plans to share out the burden of its Paris climate change pledge. The environmentally minded also worry that EU climate targets would be less ambitious without British leadership to balance against more reluctant member states such as coal-dependent Poland. AVIATION A Brexit could call into question EU agreements on open airspace that have granted the region's airlines unlimited access to the skies of fellow member states, benefiting both UK and EU airlines. It would also affect transatlantic routes because of the EU-U.S. Open Skies agreement, which gives British airlines unlimited flying rights to the United States. FOREIGN POLICY Along with France, Britain is the leading foreign policy power in the European Union, boasting a large military and close ties with the United States. After a Brexit, Washington has made clear it will be less interested in London as an ally because of a perceived loss of influence. Britain would no longer be bound by joint EU positions, for instance on economic sanctions against Russia. Britain would remain a member of NATO. JUSTICE AND HOME AFFAIRS Britain has multiple exemptions from justice and home affairs policies, notably not being part of bloc's Schengen zone of free travel. It is not clear what restrictions Britain might place on foreign arrivals. The EU has vowed to respond in kind. Britain currently recognises other EU members' arrest warrants, exchanges police information, including personal data, and is a member of the bloc's police agency Europol. Its future involvement, including access to EU databases, could diminish, meaning less cooperation on policing and fighting crime. ($1 = 0.9075 euros) (Reporting by Brussels newsroom; Editing by Pravin Char) ‘Brexit will be shrugged off soon by Indian markets, monsoon progress will remain’ Entire Europe accounts for just about 8 per cent of India’s total FDI inflows and its share in India’s FII inflows is also in single digit, according to Equinomics Research and Advisory. According to the brokerage house, India exports to entire Europe is less than 15 per cent of total exports. On such a low base of India’s exports, even if there is an absolute fall of 10 per cent in exports to Europe, it wouldn’t impact much our overall exports, Equinomics research in a note said. So what is going to impact our Indian equity markets post Brexit. Market experts believe, monsoon and corporate earnings will give direction to domestic stock markets in the short-to-medium term. However, In the long-term only if events like Brexit lead to strengthening of global deflationary pressures, then Indian markets would have problems. India outperformed most equity markets in the world in the last one year. "If monsoon is good, India would outperform many major equity markets of the world once again. Exactly in about two weeks’ time, most domestic market participants would forget the Brexit event like now no one talks about Bihar election, Greece crisis, Chinese market crash, said, G Chokkalingam, founder and managing director, Equinomics Research and Advisory. On Friday, Britain voted to leave the EU in a deadly blow to the 28-nation bloc, forcing Prime Minister David Cameron to announce his resignation in the wake of defeat in the referendum whose result triggered a panic reaction in world markets and raised questions over immigration and other issues in the UK after the divorce. Brexit won finally by a wafer-thin majority of 51.9 per cent in the referendum held on Thursday that also raised questions over the longevity of the Conservative Prime Minister who aggressively campaigned for Remain. According to market experts, domestic companies with a significant exposure to the UK markets may face some heat. Sunil Kumar Sinha, principal economist, India Ratings and Research said, "As the outcome of referendum on Brexit is in favour, the impact is felt across the globe. However, from India’s perspective Brexit will have both positive and negative impact. As Brexit will vitiate the already uneven and fragile global recovery, it will exert downward pressure on global commodity prices and India will benefit being a net commodity importer. However, with risk rising in the global financial market foreign capital will flow out putting pressure on rupee to depreciate and making Indian financial market volatile. A number of Indian corporates having exposure to Europe and UK either through trade or in case their production units are located there would be adversely impacted." The BSE Sensex plunged over 1,000 points and Nifty slid below 8,000 mark on Friday. (With agency inputs) Ready to act on any ‘disorderly behaviour’: Raghuram Rajan on Brexit Reserve Bank Governor Raghuram Rajan today said the central bank was watching markets closely on the fallout of UK voting for exit from the European Union and was ready to act if there was any disorderly behaviour. In a statement, Rajan said it looks increasingly clear that the United Kingdom has voted to exit the European Union. "The RBI is watching all the markets... we are ready to act when there is disorderly conduct, disorderly behaviour (in the markets)," he said. Markets, he said, are trying to factor the consequences of Brexit, which has already led to sharp corrections in financial markets around the world. "We are prepared to act if necessary," he said. The Indian economy has good fundamentals, low short-term external debt and sizeable foreign reserves, he said, adding these should stand the country in "good stead in the days to come." "Reserve Bank is continuously maintaining a close vigil on market developments, both domestically and internationally, and will take all necessary steps, including liquidity support (both dollar and rupee), to ensure orderly conditions in financial markets," he added. Brexit: India has enough fire power to deal with the situation, says Shaktikanta Das Stating that the markets are seeing a spontaneous reaction over Brexit, Ecnomic Affairs Sectretary Shaktikanta Das assured that India has enough "fire power" to deal with the situation. "Markets are reacting sponteneously and will stabilise in a few days," he said. "We are prepared to deal with situation as it is emerging today. Government has discussed all possible eventualities of Brexit," he said. "Government may accelerate growth programmes following UK's Brexit decision," he added. Das cited India's domestic fundamentals to reason that India will not suffer from any long-term impact of Brexit. "Look at our foreign exchange reserves. Inflation is also coming down," he said. Brexit referendum Live: BBC forecasts that UK has voted to leave the European Union Meanwhile, seeking to assure investors on Brexit, Finance Secretary Ashok Lavasa has said that the government and RBI are ready with measures to curb volatility. Meanwhile, Banking Secretary Anjuly Duggal has said that he doesn't see Brexit impacting India in the medium or long term. RBI has intervened in the forex market with liquidity support, as Brexit fears have seen rupee diving. Rupee plunged 74 paise against US dollar to 67.99 in early trade. Sensex nose dived 940 points as leads showed 'Leave' camp ahead in 'Brexit' referendum vote, Nifty tanked as much as 281.50 points. In a historic move, Britain seems to have voted to exit the European Union! Supporters of Brexit have seized the lead in the vote count from Britain's bitterly contested referendum, setting sterling on track for its biggest ever fall on world markets. The British currency fell as much nine percent to a 30-year-low below $1.35, marking a sharper dive even than on 'Black Wednesday' in 1992 when financier George Soros was instrumental in pushing the pound out of the Exchange Rate Mechanism that predated the euro. (With inputs from Agencies) Jaitley seeks to calm Indian markets amid Brexit mayhem New Delhi, June 24 (IANS) India's Finance Ministry on Friday sought to calm stakeholders' nerves amid mayhem in the financial markets following Britain's vote to opt out of the European Union. The news pulled the rupee down to below the $68 mark while a key stocks index lost over 1,000 points. "We respect the referendum's verdict. We are also aware of its significance in the days ahead and in medium term," Finance Minister Arun Jaitley tweeted from Beijing. "We are well prepared to deal with the short and medium term Brexit consequence -- strongly committed to our macro-economic framework with focus on stability," said the finance minister. "Our macro-economic fundamentals are sound with a very comfortable external position, solid commitment to fiscal discipline and declining inflation," he added. "The government and the Reserve Bank of India as well as other regulators are well prepared and working closely together to deal with any short term volatility. Our aim will be to smooth this volatility, minimize its impact on economy in short term. For the medium term, we will pursue our reforms agenda." As news spread that Britain has opted out of the European Union (Brexit), a key Indian stock index lost over 1,000 points, or nearly 4 percent, while the rupee dived below the $68 mark. Around 11:30 am, the sensitive index (Sensex) of the BSE was ruling at 26,054.74 points, down 947.48 points, or 3.51 per cent, while the Nifty of the National Stock Exchange was trading at 7,961.40 points, down 309.05 points, or 3.74 per cent. --IANS Indian student community to gain from Brexit While worries over Brexit consequences remain in many quarters, one major beneficiary of the development could be Indian students the United Kingdom or those who are planning to travel there for higher studies. The sharp plunge of over 9 per cent in the British Pound will make remittances cheaper for financing Indian students. “The fall in the Pound is good news for the student community in UK since it would be favourable for sending remittances,” Sudarshan Motwani, Founder and CEO of BookMyForex told FeMoney. ALSO READ | Brexit happens! Travelling to UK set to become cheaper for Indians British Pound plunged against Indian rupee by over 8 per cent to Rs 91.36 intra-day as news filtered in that UK has voted in favour of Brexit. Motwani said that the Pound to rupee should remain in the 91-94 region. “It is difficult to predict the rupee-pound movement. But my feeling is that it will remain in the 91-94 range,” Motwani said. Indian student community is one of the largest overseas student group in the UK, which has been one of the favoured destination of higher studies and constitutes nearly 4 per cent of all internation students. However, high cost of education and visa norms that restricted post-study work has resulted in a drop in flow of students from India to the United Kingdom of late. more  

till it is not out On Mon, Jun 27, 2016 at 5:31 PM, Rajesh Iyer wrote: > more  

Indian market crash is mainly due to couple of reasons. 1) Many Indian companies need to have another HO or a branch office now in UK also as they have exited EU. 2) The trade pact with EU will not be applicable to UK as we need to have a new pact with UK separately. more  

fluke.....it seems we are still living in the colony of British who are giving shelters to our fugitives On Fri, Jun 24, 2016 at 5:01 PM, Aditi Jain wrote: > more  

It's a good think for a long term period, and good for India because it was a starting phase. The next level is more painful, so this will prepare Indian economy and currency both. The real picture.....................? more