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Anxiety over Greek referendum, short-lived volatility expected

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By Rohit Vaid

Mumbai: Slight volatility is expected to hit the Indian equity markets in the coming week as investors will be jittery on account of the Greek referendum, upcoming first quarter results, the monsoon’s progression and key macro economic data.

However, market observers predicted to IANS that the volatility could be short-lived, as strong domestic fundamentals, economic reforms and a pick-up in government and private investments take place.

“Markets are expected to be slightly volatile in the beginning of the week due to the Greek referendum. For the short-term the Greek issue will be big enough for the market as a cue,” Devendra Nevgi, chief executive of ZyFin Advisors, told IANS.

“However, after the initial factoring-in of the situation, the domestic fundamentals such as policy initiatives and data points will be back into focus. These domestic factors are positive and will drive the markets to stability,” he added.

According to Dipen Shah, head of private client group research with Kotak Securities, the markets are hopeful that the outcome of the Greek referendum will not have any significant repercussions on the global economy – and especially India.

“The Indian economy is not linked to Greece in any major way. While there can be an impact on currency due to potential outflows, the strong forex reserves should help in reducing the impact to a great extent,” Shah said.

The Greek government has called for a referendum to let the people decide on the terms and conditions of another bailout.

Gaurav Jain, director of Hem Securities, elaborated to IANS that the positive bias in the Indian markets is expected to continue with Nifty having the potential to reach the 8,700-mark on the higher side.

“If things turn out to be negative, then the positive bias will help in mitigating the damage. Nifty in that scenario can be pulled down to the 8,000-mark on the lower side,” Jain said.

The markets will be looking ahead for key inflation and factory output data points like CPI (consumer price index), WPI (wholesale price index) and IIP (Index of Industrial Product) numbers.

“Traders will be eyeing the industrial production data for May scheduled to be announced on July 10. Needless to say, the progress of the monsoon will also remain in focus for the entire month,” Jayant Manglik, president for retail distribution with Religare Securities, told IANS.

The IIP data assumes significance as that for core sector industries released on June 30 showed the fastest pace of growth in the last six months ended May 2015 – at 4.4 percent year-on-year.

The eight core industries which comprise 38 percent of the total weight of items included in the Index of Industrial Production (IIP) stood at 178.6 as against 162.4 in April.

Analysts also point out that the countdown has begun for the earning season scheduled to start from July 21, which they believe holds the utmost importance in shaping the market’s direction.

“There is a hope that the first quarter (Q1) numbers due to be released soon will be better than the Q4 of 2014-15. Factors like lower inflation, easing of monetary policy and stable rupee are expected to be translated into better Q1 numbers,” Anand James, co-head, technical research desk, Geojit BNP Paribas, told IANS.

“There is also hope that the Q1 guidance is also going to be positive. However, in the worst case scenario, the markets seem to be ready for any negative surprises, especially in sector or stock-specific areas,” he added.

According to Anand, the market trajectory will also be influenced by the political climate leading up to parliament’s monsoon session later this month. The session is crucial because major bills such as on GST (goods and services tax) and land acquisition will be presented in parliament.

“The progress of monsoon will also be in the focus. We have noticed weakening of monsoon in the early part of this month. The continued weakness coupled with any adverse inflation numbers will give out negative signals for future lending rate cuts,” Anand added.

The barometer index of the Indian equities market, the 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE), gained 281 points or 1.01 percent during the weekly trade ended July 3.

The index closed at 28,092.79 points from the previous weekly closing of 27,811.84 points on June 26.

(IANS)

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Raghuram Rajan: The Man Who Revolutionized The Indian Banking System

During his academic days, he won the Director's Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad.

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Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh. Wikimedia Commons
  • On September 5, 2013, Rajan took charge of Governor of India’s central banking institution
  • Raghuram Rajan graduated in electrical engineering from IIT Delhi
  • Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks

Raghuram Rajan is one of the technically financial people to grace the Indian economy and banking sector. He came at the time when the Indian economy was in the worst crisis ever faced in last decades. Through his meticulous planning, he banked on reforming and stabilizing the financial situation in the nation. On September 5, 2013, Rajan took charge of Governor of India’s central banking institution, succeeding Duvvuri Subbarao.

Raghuram Rajan was born on 3 February 1963, in Bhopal, Madhya Pradesh in a Tamil family. His father was a senior officer in the Intelligence Bureau department. He is married to Radhika, a classmate from IIM and has two children.

Also Read: Was ‘The First Women President Of India’ A Well Deserved One?

Raghuram Rajan graduated in electrical engineering from IIT Delhi and then he joined Tata Administrative Services as a management trainee. However, he soon left this to pursue a doctoral program in management at the MIT Sloan School of Management. After that, he acquired a Post Graduate Diploma in Business Administration from IIM, Ahmedabad in 1987 and later Raghuram Rajan did his PhD from the Massachusetts Institute of Technology.

Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015.  Wikimedia Commons
Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. Wikimedia Commons

During his academic days, he won the Director’s Gold Medal in IIT Delhi and was a Gold medalist at IIM Ahmedabad. Even after being so bright, he admitted of having poor command over the Hindi language.

Take a look at some of the aspects related to the life of one of the genius economist of India: 

  1. After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Before that, the rupee had weakened sharply against the dollar, hitting almost Rs 69 to a single dollar.
  2. To bring down the inflation, the RBI under Rajan adopted the Consumer Price Index (CPI) despite the Central Government’s disapproval. Consequently, the CPI dropped from 9.52 percent in August 2013 to 5.24percent in April 2016, accompanied by the required drop in global commodity prices.
  3. Under Raghuram Rajan, the RBI licensed two universal banks and approved eleven payments banks. It was done to extend the country’s banking services to the two-thirds of the population, who were until then still deprived of basic banking facilities.
  4. Raghuram Rajan has the privilege to be appointed as the youngest-ever Economic Counselor and Director of Research (chief economist) at the International Monetary Fund (IMF) from October 2003 to December 2006.
  5. During his stay at IIT Delhi, Raghuram Rajan was the head of the student’s council.
  6. Raghuram Rajan was ranked by his fellow mates as the economist with ‘the most important ideas for a post-crisis world’ in a 2011 poll in The Economist.
  7. Raghuram Rajan has the distinction of being featured on Foreign Policy magazine’s Top 100 Global Thinkers list in 2010 and 2012.
  8. Raghuram Rajan has also served as a professor in the University of Chicago’s Booth School of Business in the economics faculty. Before leaving the position due to public service commitments, he was awarded the accolade in 2007 which he held till 2013.
  9. Raghuram Rajan was appointed as the Vice-Chairman of Bank for International Settlements (BIS) on 9th November 2015. The bank was established as an international company by shares of the central banks of different countries. The bank provides banking facilities to the central bank and is also regarded as the key bank of the central banks.
  10. Raghuram Rajan authored a very popular book, ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy,’ was awarded the Best Business Book of the Year in 2010 by Financial Times-Goldman Sachs. This book argued that serious flaws in the economy are to blame for the current economic crisis.

    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
    After Raghuram Rajan joined as the Governor of the RBI, the rupee rose 2.1 percent against the US dollar. Wikimedia Commons
  11. Raghuram Rajan was awarded the inaugural Fischer Black Prize by the American Finance Association in January 2003. The award is given to the financial economist under the age of 40 who has made the significant contribution to the sector and is given in every two years.
  12. In 2005, Raghuram Rajan presented a theory outlining the looming financial dangers and risks associated with the current system and he got a very negative response for it. But when an actual global economic crisis occurred in 2008, his analytical skills came true.
  13. During Raghuram Rajan’s term as the RBI(Reserve Bank of India) governor, the RBI sold the longest ever government bonds with a 40-year maturity.
  14. In September 2003, Raghuram Rajan became the youngest ever to be appointed as the Economic Counselor and Director of Research (Chief Economist) of the International Monetary Fund.
  15. Raghuram Rajan has served at the University of Chicago’s Booth School of Business as the Eric J. Gleacher Distinguished Service Professor.