The crucial Britain referendum to decide whether Britons will remain in European Union (EU) or not is slated for Thursday. The decision will have an impact on the world economy and financial markets. On the domestic front, Securities and Exchange Borad of India (Sebi), Reserve Bank of India (RBI) and exchanges have already stepped up vigil to deal with the consequences on markets. Voting is scheduled to take place at 11.30 am on Thursday and will close at 2.30 am India time. The results for the referndum is expected to out between 5.30 am to 10.30 am on Friday.
Japanese brokerage House Nomura told CNBC TV channel that markets are not anticipating Brexit and if it happens then markets may correct by 4-5 per cent.
According to experts, Indian companies which have major exposure to EU will be affected due to currency fluctuations. Metal companies like Tata Steel and Hindalco, auto majors such as Tata Motors, Motherson Sumi, IT companies like TCS, Tech Mahindra, HCL Tech and Pharma companies like Lupin, Dr Reddy’s Laboratories will get impacted from Brexit.
In the pharmaceutical and healthcare space, Dr Reddy’s Laboratories, Glenmark pharma, Natco Pharama, Hikal Ltd and Sequent Scientific also generate some of its revenue from Europe.
Indian IT companies get anywhere from 6-18 per cent of their revenues from the UK. The UK has traditionally been the gateway for Indian IT firms to enter Europe and they have set up a large presence in the UK to serve the EU markets from their headquarters in London, according to media reports. For the financial year ended March 31, 2015, Apollo Tyres garnered 31 per cent of its consolidated revenue from Europe.
Shares of Tata companies has been witnessing selling pressure ahead of the crucial ‘Brexit’ referendum. Sudip Bandyopadhyay, chairman of Inditrade Capital said, “Tata Motors will be among the companies to be most exposed in the event of Brexit. Britain exit from European Union will impact the profits and revenue of the auto major. If Brexit happens, then Tata Motors will take huge beatings and we can see up to 12 per cent fall in its shares.”
On Wednesday, Tata Motors scrip fell 2.58 per cent to Rs 472.50, Bharat Forge went down 2.39 per cent to Rs 737.75, Hindalco dipped 1.01 per cent to Rs 122 and Tata Steel (0.55 per cent to Rs 332) on BSE.
Tata Motors declined on concerns over its luxury unit Jaguar Land Rover’s sales may get hit if Britain votes to leave the European Union. Shares of Tech Mahindra lost 0.94 per cent and Infosys fell by 0.61 per cent.
