Mumbai: The benchmark BSE Sensex could dive to 22,000 levels by end of the current fiscal, owing to adverse global developments following Britain’s exit of European Union, says a report.
According to financial services firm Ambit Capital, while the direct effects of Brexit on India appear “worrisome but manageable, it is the second round impacts that could affect India more profoundly.”
These include China seizing Brexit as an opportunity to decisively devalue its currency and Europe facing a recession. Accordingly, the report said “fair value for the Sensex is 29,500 for fiscal ending March 2017, we reiterate that there is a high risk of the index sliding to 22,000 in the wake of adverse global developments”. The report noted that the increase in global uncertainty owing to Brexit alongside Raghuram Rajan’s departure from the RBI could trigger a flight of FII debt from India, which in turn is likely to push up short-term commercial paper and commercial deposit rates.
On Tuesday, indices are likely to trade in a narrow range with a negative bias due to lack of significant triggers. Markets are likely to be volatile as traders roll over their positions to the July futures and options contracts ahead of the expiry of June series on Thursday. -Agencies
