Brexit – a hurdle to Indian Stocks

Brexit waved off the entire stock market system across the globe. Indian markets too faced a serious setback but managed to recover above the levels where they opened. There were few stocks which gave a drastic impact and are likely to get impacted to a greater extent with the coming sessions. The reasons behind the impact were Dollar appreciation against all other currencies, companies earning from Eurozone, gold and silver hitting new multi-year highs.

Due to longer term impact of fall in revenues from Euro-areas, UK might have to reconsider all trade agreements with individual countries.

There are 16 companies with certain significant companies either earning revenues from Euro Zone through their assets or through exports. Higher impact has been borne by Auto and Auto ancillaries and the Tata Group as a whole. Defensives like IT and Pharma may recover in near term with higher revenues amid Dollar appreciation.

A risk-off trade will get triggered driven by rise in Dollar as against Euro and GBP, ensuring capital outflows from India. Euro will keep on tumbling in case we see series of exits from Eurozone after Britain.