Italian shares fell as much as 2 percent at the start of the trading on Monday, but regained their poise as investors look beyond the political risk of the referendum vote.
Most investors aren't expecting that the resignation of the Italian Prime Minister Matteo Renzi will lead to an early snap election and have shifted their main focus to the upcoming European Central Bank meeting.
"Investors are mindful that the market reaction after a number of political surprises this year, notably the Brexit vote and the US election, has been short-lived," Seamus Mac Gorain, portfolio manager at JP Morgan Asset Management, told CNBC via email. "Thus far market reaction has been generally calm and relatively marginal, as much of this had been priced in."
Prime Minister Matteo Renzi is handing in his resignation letter on Monday after losing a referendum to reform the constitution. Investors will be looking for signs of an early election but their attention is now on remarks by President Mario Draghi of the European Central Bank this Thursday, Andy Chaytor, head of European interest rates at Nomura, said over the phone.
Italian banks led the losses during Monday's early session, but most of their shares have returned to positive territory.