Celebrated Reserve Bank of India Governor Raghuram Rajan on Saturday announced that he would step down when his term ends on September 4 and return to his ultimate home, academics.
“I am an academic and I have always made it clear that my ultimate home is in the realm of ideas. The approaching end of my three-year term, and of my leave at the University of Chicago, was therefore a good time to reflect on how much we had accomplished. I want to share with you that I will be returning to academia when my term as governor ends on September 4, 2016. I will, of course, always be available to serve my country when needed,” Rajan said in a letter to RBI staff.
The news spread like wildfire in India’s financial markets and there was disbelief and confusion among analysts and Street veterans.
Here is how some of the well-known names of Dalal Street reacted to the news:-
Saurabh Mukherjea, CEO, Institutional Equities at Ambit Capital
Governor Rajan couldn’t have timed it worst. The global headwinds ahead of Brexit will keep markets volatile. Let’s see what happens on Wednesday. There will be a lot of speculation around the next governor and what policies he or she follows will be more relevant. Global risks will persist.
Siddharth Sedani, Assistant Vice President of Advisory, Sharekhan
The market really finds it disappointing that Governor Rajan would be moving out. It may trigger a kneejerk reaction in the market. More so if global markets crack due to some reason. In that case, the domestic market will turn highly volatile. However, an institution is bigger than an individual and we may see couple of PE shedding off from the market with a caveat to the global situation.
Tushar Pendharkar, Equity Strategist, Right Horizons Financial Services
The market was expected to remain weak in June, not only because of Rajan but there are also other factors such as Brexit, delayed monsoon and weak economic data. Brexit could have a bigger impact than Rexit.
Nitasha Shankar, Head of Research, Yes Securities
The market would be focusing more on a possible vote in favour of Brexit, which may result in high volatility. I don’t think the market would read too much into Rajan not wanting to continue at RBI.
Ajay Bodke, CEO & Chief Portfolio Manager, Prabhudas Lilladher
Rajan stepping down as the governor of India’s central bank will lead to volatility in the market for sure. But, after the initial wobble in the currency, bond and equity markets things should stabilise.