Postweek (20–24 Jun)

Brexit, FDI norms, Smart City, Monsoons

Brexit

In the biggest political event of the year, the UK electorate voted for United Kingdom to leave the European Union in a referendum held on 23rd of June. The vote doesn’t mean that UK will leave European Union immediately though. It will have to first trigger article 50 of Lisbon Treaty which would then start the 2 year countdown to departure. In a nutshell, nothing is going to change overnight. Financial markets across the world reacted very sharply to the news and tanked upto 12% in one day. The major concern is about future uncertainty and other European countries following Britain’s footsteps.

Indian market also reacted sharply on Friday, but recovered in the afternoon session to post a weekly drop of 1%. Both the RBI and government reiterated on Friday that Brexit will have minimal impact on India.

Brexit is not entirely negative for India. The expected slowdown in European economies because of Brexit can lead to fall in prices of commodities like crude which will help India save on its import bill (every $1 drop in crude price leads to roughly $1 billion saving in India’s oil import bill) Companies for which falling commodity prices result in higher margins are expected to benefit in this scenario. Our Commodity Glut smallcase helps you take direct exposure to these stocks easily.

FDI Norms

On Monday, the government relaxed FDI norms in sectors like food processing, broadcasting and defence and did away with the need for prior government approval for foreign investment in brown field projects in pharma and aviation. In the pharmaceutical sector, foreign investments in brown field projects up to 74% has been permitted under the automatic route and the investments beyond 74% under approval route. Lots of fresh deals are expected in the sector under new FDI regime. With ace investors like Rakesh Jhunjhunwala upbeat on pharma stocks, invest in the same through smallcase Pharma Tracker.

Smart City Launch in Pune

Indian government officially kickstarted the Smart City project on Saturday in Pune. Projects with a total investment of Rs 2,900 crore were also launched on Saturday in different states. Government is planning to slowly revamp and transform 100 cities under this project. The project has a total outlay of Rs 98,000 crore and companies from related sectors are expected to benefit. Play smart and invest into such companies through our Smart Cities smallcase.

Indian Markets

For the week, BSE Sensex closed down -0.86% at 26397.71, whereas Nifty closed down 1% at 8088.6. Almost all sector indices closed in red, with Nifty Realty being the biggest loser for the week. Nifty Pharma was the only sector which bucked the trend and closed +0.86% up. Monsoon is picking its pace and is expected to hit Delhi in next 3–4 days. With falling rain deficiency and an above average monsoon prediction by Indian Meteorological department, this looks to be a good time to invest into monsoon stocks. Check out our Monsoon Cheer smallcase which is up 3.36% since its inception last month.