Markets likely to open lower

New Delhi, Dec. 10: Indian stock, bond and foreign exchange markets are all likely to open lower on Tuesday after the shock resignation of the head of the Reserve Bank of India ( RBI).

RBI governor Urjit Patel in a brief statement said that he had resigned for “personal reasons”. He has clashed with the government over the central bank’s independence, worrying investors in Indian markets, who will want to know who replaces him and the effect on monetary policy. “Markets certainly will be concerned unless there is further clarification that comes through tonight,” said R. Sivakumar, head of fixed income at Axis Mutual Fund.

Mr Patel’s departure comes at a critical time for Indian investors, just before a series of state elections on Tuesday, where the ruling Bharatiya Janata Party led by Narendra Modi may lose ground.

The central banker’s resignation on Monday evening came after the majority of markets in India were closed, but futures contracts, which track the performance of asset classes outside of market hours, suggested significant declines were likely on Tuesday morning.

Rupee forwards tracking the performance of the currency against the dollar posted their biggest daily slump in more than five years on Monday.

The one- month contract was last quoted at 72.78 per dollar compared to a spot market rate of 71.35 percent dollar.