Grexit shakes Indian bourses; but don't worry, say experts

The Greek Exit from Eurozone (Grexit) phenomenon seems to be looming large over the markets once again, and the India and China markets seem to be keenly watching the events happening in Greece.

Intimidated by heightened fears about the Greek economy, the benchmark BSE Sensex dropped by more than 600 points in early trade on Monday, but managed to recoup some loses in the latter half on selective buying in the beaten-down counters to settle the day lower by 167 points at 27,645.15.

Market experts however believe that the impact of the events on the Indian markets are likely to be limited.

“The Greek crisis may result in increased volatility in the currency markets. I believe that the dollar index may increase in the short term, led by weakening of the Euro, implying that the rupee may lose some ground. However, if Greece is to eventually exit the eurozone, this impending crisis will have finally found a resolution and the volatility will subside. The focus would then shift back to domestic factors, such as the revival of the investment cycle and earnings, which are looking very promising,” Angel Broking Chairman and Managing Director Dinesh Thakkar told Deccan Herald.

Nilesh Shah, Managing Director of Kotak Mutual Fund, also believes that Indian markets are less likely to be volatile than their peers.

“From India’s point of view, our markets will witness little lower volatility than our peers, as we are least impacted from the unfolding events in Greece and the EU. Certain stocks in IT, pharma and auto anciliaries having significant exposure to the euro will underperform the market. Since the Greece issue is well known for some time, it is unlikely to cause as much correction as the 2008 global crisis,” Kotak Mutual Fund Managing Director Nilesh Shah said.

According to Gaurang Shah of Geojit BNP Paribas, the markets could witness a correction but they could recover quite soon as well.

“The events in Greece are likely to impact the Indian markets. It is difficult to predict what will be the final outcome. Depending on the newsflow, the markets may correct 4-5 per cent, but they are likely to recover the losses very soon,” Shah told Deccan Herald.

Meanwhile, the rupee recovered from initial losses, in line with equities, but still ended lower against the US dollar by tumbling 20 paise at 63.84, due to the Greek crisis, amid month-end demand for the greenback from importers.