Is the resignation of the RBI Governor a ‘much-ado-about-nothing’ event for the stock markets? Experts say individual personalities at the helm of India’s central bank seem least of the worries for equity traders.

Urjit Patel’s exit was discounted on Tuesday by markets like that of Raghuram Rajan’s a couple of years ago. On Monday evening, fear of unknown gripped many after Patel announced his resignation from the post of RBI Governor. In a knee-jerk reaction, Singapore Nifty, an offshore proxy for the Indian markets, witnessed an incremental fall of over 150 points or 1.5 per cent. But Tuesday, which was supposed to be a litmus test, turned out to be just another routine trading session; the markets closed on a calm note even as election results in five key States were being announced. The Nifty recovered nearly 200 points from the day’s low and the Sensex around 500 points. Both indices staged a comeback of over 2 per cent after the initial jitters at market opening.

“A tiff between central bankers and the government is not new globally. In the US, stock markets didn’t react much when the Federal Reserve chief’s tenure was not extended in the past or when President Trump poured scorn on Jerome Powell. But in India, it’s all media activism, which has made out as if the RBI governor’s resignation was an event. The markets rightly ignored the noise on Tuesday,” said Deven Choksey, Founder Promoter, KR Choksey Investment Managers.

On June 20, 2016, when Rajan announced his resignation, equity markets recovered from a weak opening. The Sensex closed with gains of 0.91 per cent at 26,866.91. The Sensex rallied 10,000 points in less than two years post Rajan’s exit from the RBI.

“The markets have certainly moved beyond personalities, especially at regulatory institutions,” said Rahul Arora, CEO — Institutional Equities, Nirmal Bang.

“Be it Rajan, Subba Rao or YV Reddy, media seemed more worried about who could replace these stalwarts at the RBI and even spread fear about the central bank’s future course.

“But the markets understand that the show will go on. Focus is now on crude, rupee and downward inflation forecast. The RBI now is committee-driven and does not depend on individuals. Factors point to a strong earnings recovery and hence, refusal of the indices to look elsewhere on Tuesday,” he added.

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