Global investors will watch post-Rajan monetary policy: SocGen

Investors will keenly watch India’s monetary governance and commitments on controlling inflation post Rajan's exit, says Guy Stear, Head of Emerging Markets Strategy at Societe Generale.

In an interview to CNBC-TV18, Stear says India has done well over the last 6-12 months in terms of monetary governance relative to its emerging market peers and Rajan has aided this. After his exit, though, the government and new Reserve Bank chief will need to reassure investors that India continues to be a good place to invest.

He says most of the positives of the Brexit vote falling apart seems to have been factored in and sees further gains in European indices, if any, to be limited to 2-3 percent.

"May be we could see European stock indices going back to around 3100, back to sort of the peak levels we saw at the end of May, " he says.Below is the transcript of Guy Stear's interview with CNBC-TV18\\'s Surabhi Upadhyay.Q: The complete reversal is playing out, the reverse trade, the Bremain trade if I could say that, which way do you see this going as we get into Thursday?A: We have had enormous bounce and you could see that particularly in sterling which has been more or less the most traded way of people to express their views. We are almost back to the peak levels we were at in terms of sterling versus the dollar over the months of trading range before the polls.I think the feeling in the markets right now is it isn’t going to happen. So, people are sort of very comfortable and perhaps maybe a little bit too comfortable because I think they are going to still see quite a bit of volatility between now and Thursday.Q: If we don't get an exit vote, what does that mean for equities?A: We have had such a good rally in the past couple of days that if we sort of inch higher in the next 24 hours probably that is what the market is discounting right now. So, you could see us may be go another 2-3 percent higher. However I think that we are sort of positioned with the bounce that we have had just in the past couple of days of assuming that everything is fine and the vote is going to pass, that the UK will still be in. May be we could see European stock indices going back to around 3100, back to sort of the peak levels we saw at the end of May. We are sort of halfway back to the middle of the range we have seen, so a lot of good news is actually being discounted in the past couple of sessions.Q: I don't know if you do have a view on India if you track what goes on here in this market but we have had a very eventful weekend with a lot of talk about what happens when governor Raghuram Rajan steps down as the chief of the central bank, what is your call on whether that event has any bearing on which way the foreign view on India plays out?A: It depends very much on who his replaced by and what kind of signals both the government and the central bank give after we have a new Reserve Bank of India governor. What the international investors are looking for is a still strong commitment from India in terms of controlling inflation. India has looked very good over the past 6-12 months in terms of its monetary governance, in terms of its relative to the rest of the emerging market group, Rajan has been part of that equation and to convince the interest of investors that India is still a good place to put money that needs to still come out in terms of restructuring of the central bank.