Tata Group Stocks Hit Hard on Brexit, Tata Motors Tanks 13%

Tata Steel’s Port Talbot plant has moved a step closer to closure following Britain’s decision to leave the European Union, but buyers remain interested, industry sources said on Friday.

With Britain deciding to vote against staying in the EU, Tata Sons, which has big business interests in the United Kingdom, has said that it is reviewing its strategy and operations.

It remains possible that the Indian group’s board will still be able to secure a buyer for its British operations, with other parties including the management of the Port Talbot site and JSW Steel, another Indian company, assembling offers.

“The impact of Brexit is likely to be short-term and is likely to settle in 10 to 15 days”.

The massacre continues in Asian markets with the European Union referundum favoring Britain’s exit from the EU.

According to reports, Indian IT companies earn anywhere between 6-18 percent of their revenues from the United Kingdom, which has traditionally been the gateway for them to Europe.

Pankaj Pandey, head of research at ICICI Securities, said, “There is no clarity on when the currency will stabilise, so there will be uncertainty on the operational front for companies”.

Even several pharmaceutical companies have sizeable exposure to United Kingdom and Europe and may continue to remain under pressure. Foreign investors will try to hedge their losses by sell-offs in emerging markets, including India.

India, on the other hand, is the third-largest investor in terms of number of projects in the UK.

With only over 10.9 MT production previous year, the United Kingdom is not a significant player in the world steel market which produced 1,621 MT in 2015.

There is a counterview of those who feel that the Brexit will potentially open up new trading opportunities for India at a time when UK’s share in India’s global trade is declining. In a separate announcement made on Friday, the United Kingdom subsidiary said that it doesn’t see its operations or investment commitment getting impacted because of United Kingdom exiting the EU. “Whatever the political framework, we are committed to developing the best prospects possible for our United Kingdom operations”. These should stand the country in good stead in the days to come.

Market regulators have been on alert to avoid volatility in the markets, with the Reserve Bank of India (RBI) saying earlier that it would take measures, including providing liquidity support, to ensure orderly conditions in the markets.