Everything You Need To Know About Brexit

Hello Traders,

We have been getting lots of requests from past few days to cover Brexit. This post will be covering everything you need to know about Brexit.

What is Brexit?

Brexit is formed of two words  Bre (Britain) + Xit (Exit). This term talks about Britain’s Exit from the European Union. Basically, it is a referendum, where the UK Nations can vote and decide on whether UK should remain part of EU or leave it. This referendum is scheduled for today i.e. 23 June 2016 and the result should be known by early morning on Friday, June 24, though this will depend on the circumstances in the 382 local areas where the count is being carried out.

European Union. What's That?

Wikipedia explains "The European Union (EU) is a politico-economic union of 28 member states that are located primarily in Europe". EU operates a unified market which allows free movement of goods, services, people and capital between member states. Members include Austria, Belgium, Bulgaria, Croatia, the Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.

Why Was The Vote Called?

 U.K. and the EU have had a rocky relationship in recent years. U.K. joined the EU in 1973 and today 73 members of the European Parliament hail from the U.K. Prime Minister David Cameron promised to hold a referendum on U.K. membership in the EU if he was re-elected in 2015 and he has kept his word. Both the U.K. Independence Party (UKIP) and Cameron’s own Conservative Party have pushed for the vote.

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A major part of Britain's population believes that Britain is being held back by the EU and its not getting sufficient returns for the money its paying in to be a part of EU and it would be better if its takes back the control of its borders.

What Opinion Polls Say?

In the latest surveys, ORB for the Telegraph showed 53% of respondents are in favour of Britain's EU membership, while 46% are against it. But YouGov for TheTimes newspaper showed Brexit support has a two point lead, at 44% to 42%. An Survation poll for IG Group put the Remain camp at 45% and the Leave camp at 44%.

India & Brexit

India as a country won't be among the most affected by Brexit. But the repercussions would definitely be felt. Analysts are yet to draw conclusions on how far reaching it could be. There are over 800 Indian companies operating in the UK. If Britain exits from EU, then it may affect Indian companies’ appetite for investing in the UK, particularly those seeking access to the European market.

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Also, we may witness futher depreciation in rupee because of the double effect of foreign fund outflow and the rise in dollar.

However, we believe there are tonnes of opportunities in Indian market. Brexit may have short term negative impact on the market but the long term growth story of India will remain intact. 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 which are having major exposure in EU may to face the heat in case Britain exits EU.

Hope this post helped you clear all your doubts regarding Brexit. Your views are welcome in the comments sections below. Keep visiting us to stay updated on latest happenings in the economy and markets.

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