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Panic grips Indian market on global uncertainty post Brexit; media stocks plummet

28-June-2016
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Panic grips Indian market on global uncertainty post Brexit; media stocks plummet

The UK’s surprising exit from the EU has sent shockwaves across the world. Global markets saw their biggest crash in 5 years and currencies have also taken a hit. The British pound fell to a new 30 year low. India, too, has not been immune to the repercussions of the Brexit.

On Friday, after it became clear that the UK would be leaving the European Union, Indian stock markets went into freefall. Sensex plummeted by 604.51 points to close at 26,397.71 points while the Nifty went down by 181.85 points to close at 8,088.60. On Monday, the Sensex ended on a flat note, closing at 26,402.96 points (up 5.25 points from Friday). The Indian Rupee too fell on Friday and is now expected to be worth Rs 70 to the dollar.

At the time of writing of this article, the Rupee was holding at Rs 67.96 to the dollar. It seems that investor sentiment is still shaky despite reassurances by government and analysts that India is well-insulated from the effects of the decision in the middle and long term.

Listed media companies in India seem to have been caught up in the general panic. Zee Entertainment Enterprises Limited (ZEEL) saw its stock price fall to a low of Rs 447.2 on Friday before ending the day on Rs 448.3. At close of market on Monday, it had fallen further to Rs 439.

NDTV saw its stock plummet to a low of Rs 83.75 before rallying and ending Friday at Rs 87.45. On Monday, it ended that day at Rs 89.25.

Sun TV Networks saw a sharp decline on Friday with share prices following to Rs 338.7. At close of market today, its share price stood at Rs 354.10.

TV18 Broadcast saw its shares hitting a low of Rs 39.5 on Friday from a closing price of Rs 42.5 on Thursday. On Monday, the shares closed at a price of Rs 41.25.

Dainik Bhaskar (DB Corp) shares fell from Rs 375 on Thursday to a low of Rs 355 on Friday before ending the day at Rs 378.5. By close of market on Monday, the share price had fallen marginally by 1.85 points to close at Rs 375.95.

Jagran Prakashan also saw a marginal drop on Friday of about 4.45 points for a lowest price of Rs 165.5. On Monday, it closed at Rs 170.10.

HT Media also saw a few hiccups on Friday but by end of day on Monday, it had recovered at ended 1.65 points higher at Rs 78.50.

Globally ad agencies also seem to have taken a hit.

WPP’s CEO, Sir Martin Sorrell, in a statement to media also spoke about his disappointment with the situation and agreed that the resulting uncertainty would “slow decision making and deter activity”.

The advertising industry in India, however, has not seen any direct impacts and neither do agency heads expect there to be any significant effects of the #brexit, at least not in the medium to long term.

“I do not see any mid or long term impact of Brexit as far as India is concerned. Meanwhile, there may be some tumult in the short term due to a depressed business sentiment. This is because it may be a period of uncertainty and businesses abhor uncertainty, thereby impacting sentiment and advertising is directly influenced and often suffers when sentiment weakens. However, I don't expect this phase to last long. In fact, in the longer run, with the UK being free to strike its own trade deals with Asian markets, newer opportunities could open up for us in India. Probably a more immediate concern for India, far greater than Brexit, is the monsoon. After 2 years of poor rains, we need a good monsoon to trigger rural consumption. Since India is more of a domestic consumption story, a good monsoon will more than offset any volatility in sentiment caused by Brexit,” said Ashish Bhasin, Chairman and CEO of Dentsu Aegis Network, South Asia, in a media statement.

Others from the advertising ecosystem also expressed similar sentiments.

http://www.exchange4media.com/advertising/adhonchos-on-the-brexit-india-effect_65008.html

One piece of worry for the advertising sector could possibly be about the likely repercussions of the exit on high spending verticals like telecom and automobile, which are expected to be among the hardest hit by Britain’s exit from the EU.

For example, Tata Motors was one of the most negatively impacted stocks on the market given their exposure to the UK. In all, media reports estimated that auto stocks lost around 10 per cent of their value post the announcement of the decision. With businesses having to rethink their Europe (and UK) strategy, there might be a fall out on marketing spending back home in India by these sectors.
 

Tags Brexit European Union Marketing

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