According to financial services firm Ambit Capital, while the direct effects of Brexit on India appear "worrisome but manageable, it is the second round impacts that could affect India more profoundly."
These include China seizing Brexit as an opportunity to decisively devalue its currency and Europe facing a recession.
Accordingly, the report said "fair value for the Sensex is 29,500 for fiscal ending March 2017, we reiterate that there is a high risk of the index sliding to 22,000 in the wake of adverse global developments".
On global developments, Ambit observed that as Brexit is likely to create sustained demand for US dollars as investors seek a safe haven in an uncertain world.
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"This appreciation in the US dollar gives China a golden opportunity to seize the opportunity thrown up by Brexit to decisively devalue its currency and thus boost its flagging GDP growth," the report said.
Moreover, Ambit said the UK having voted to exit the EU would also trigger direct adverse changes for India such as its exports and a slowdown in FDI and FII flows into the country owing to low confidence among global businesses.
These would also put pressure on the rupee as well as a pressure on domestic money market liquidity.
"Britain's exit from the EU is likely to lower business and investor confidence levels around the world which will adversely impact FDI as well as FII flows into India," it added.