The Indian stock markets did not go berserk as expected on Monday in response to the Narendra Modi government choosing deputy Reserve Bank of India governor Urjit Patel to succeed outgoing governor Raghuram Rajan.
Equity benchmarks Bombay Stock Exchange (BSE) Sensex and National Stock Exchange (NSE) Nifty were trading in the red after opening with modest gains. The Sensex was down 115 points at 27,962, while the Nifty was trading 38 points lower at 8,628.
Bank stocks were down despite the appointment being read as a signal of continuity with regard to the monetary policy, especially inflation. The Nifty Bank index was down 0.65 per cent and the BSE Bankex was also trading 0.64 per cent lower at around 11.10 a.m.
"With this appointment, the government has voted for status quo, policy continuity and macro-stability. This is the second instance after the decision to retain the inflation target of 4% (+/-2% range), where the government has demonstrated that inflation will remain a policy priority," Radhika Rao, economist, group research, DBS Bank, said in a note on Monday.
Patel will take charge as the 24th governor of the RBI for a three-year term after Rajan's tenure ends on September 4.
Stocks that were dragging the Sensex included Lupin, Tata Steel and ICICI Bank, while index gainers included Hindustan Unilever and ITC.
Among Sensex companies, thermal power producer NTPC will be declaring its June quarter results on Monday. The stock was down 1.35 per cent at Rs. 164.50.
Aviation stocks were trading with gains after Directorate General of Civil Aviation (DGCA) statistics released last Friday post trading hours showed that domestic air traffic grew 26 per cent in July on a year-on-year basis.
Jet Airways was up 2.65 per cent at Rs. 551, SpiceJet 1.79 per cent at Rs. 59.75 and Indigo-owner Interglobe Aviation almost flat at Rs. 880.25.
The country's low-cost and full-service carriers such as IndiGo, Jet Airways, SpiceJet, Go Air, AirAsia India, Vistara and state-run Air India, and few smaller players, flew 85.08 lakh (8.5 million) passengers during the month, an increase of 25.82 per cent, YoY.
The Indian rupee opened 13 lower paise at 67.19 to the US dollar on Monday.