Signs of Britain remaining in EU helped Sensex reclaim 27,000-level
Mumbai: With the latest opinion polls in Britain suggesting a clear tilt towards Britons opting for a status quo with the European Union, the Sensex on Thursday posted a surprise rally of 237 points to reclaim the 27,000-mark, in line with strong gains witnessed in the stock markets across the world.
The Indian markets, which opened flat, rose in a few hours in line with the European markets on news that those for remaining in the EU had a slight edge over the leave group. The Sensex soared 236.57 points to regain the 27.002.22 level while the Nifty gained 66.75 points to close at 8,270.45.
Britain’s leading financial daily, Financial Times poll of polls put the remain campaign ahead with 48 per cent of the vote compared with 46 for leave. A phone survey conducted by ComRes for ITV and released on Wednesday night gave the remain camp an edge of 54 per cent to leave’s 46 per cent while a separate poll from YouGov put the gap at a narrower 51:49 in favour of remain.
Ajay Bodke, CEO and chief portfolio manager (PMS) Prabhudas Lilladher, said he would not read too much into Thursday’s rally. “It was fueled by domestic institutional buying of blue chips which are at attractive levels and by FIIs who were marginal buyers.”
“Tomorrow will be the D-Day,” he said, “as trends would be clear on whether Britain would leave or stay in the EU. If the ‘leaves’ have an edge when the markets open, then there will be severe bouts of volatility and a gap down opening. If it plummets sharply, it will be a buying opportunity,” he said.
Market analyst Ambareesh Baliga shared this view and said the markets moved on news flow of the Brexit voting that had started. “Markets will move sharply either way tomorrow depending on the results. Nifty could cross the 8,300 level if the remain group wins,” said Mr Baliga.
On the global front, Asian peers, except for Shanghai, were up. “A vote for ‘remain’ would be return to status-quo and financial markets would return to normalcy, and focus would once again be on US growth numbers, Chinese economy and crude oil prices,” said Achin Goel, head, wealth management and financial planning, Bonanza Portfolio Ltd.
“But a vote for ‘exit’ would lead to a wild swing in most asset classes, especially the British Pound and the prices of safe havens as gold,” Mr Goel said.
