Demonetisation Is Not All About Negativity For Markets

Every coin has two sides--demonetisation too. While millions have been facing the heat of severe cash crunch, business and farm activities in a large part of the country have almost come to a standstill since November 9 morning and political outfits have been raising slogans against the ruling party and the country's Prime Minister. Operation Black Money, initiated by Narendra Modi-led government. has all the potential to cleanse the economy of India. The move leading to demonetisation of high-value currency notes albeit having paralysed normal life in certain quarters and dampened the mood in the equity markets leading to drastic slides, if we look at a long-term picture, things are bound to be better for the people with less solvency, middle-class population of the country and each of the tax-payers. Political repercussions, however, may be tremendous as polls in few states are due during the first quarter of the next calendar year and this move by Modi backed by BJP may even backfire leading to poll debacle in some states including Uttar Pradesh for the ruling NDA. But then certain smaller interests can be ignored when the purpose is to serve a better, bigger objective, benefitting the entire nation. 

We can already see the banks are turning major beneficiaries of the demonetisation move. Ailing and struggling with huge NPAs, lack of funds from government even though promised in the last Union Budget, public sector banks now celebrate the demonetisation move and its after effect as they are flooded with cash deposits. Payment banks, mobile wallet entities, NBFCs and housing finance banks will also soon have reasons to celebrate as the style of transactions is changing fast in our country since November 9 and interest rates are going to fall steep allowing a large number of people to buy homes, vehicles and other such items. For retail investors, I will rather say, look for buying opportunities even when markets are falling as you plan to build long-term asset base. The infrastructure story in India is going to continue and cement, infra companies are going to do well in next few months. Select pharma stocks also can be accumulated in a staggered manner.

In this edition of your preferred investment fortnightly, we have dedicated the cover story package on the banking sector suiting the time and development. Where do the banks in India go from here—our research hands have made sincere efforts to respond to this big question with analysis of banking stocks and you can also find lot more coming from the experts and who’s who from the industry. Considering all the hype over demonetisation, we have also accommodated a report on the sectors to be immediately impacted and also sectors which may be impacted over a period of time. I am sure you will find all these as good read and helpful towards your future investment decisions. Payment banks are the future and so we have included a detail report on the same, thus covering almost all the aspects of banking sector with analysis and latest developments.

Finally, as we keep our ears and eyes closer to the equity markets to ensure you get the best investment advices as always, don’t panic as things are slowly but steadily coming under control. Markets may be redefined from here but not lost. Your money remains safe even when there is a temporary impact.

For more, feel free to write to us—we are always there by your side during the turbulent days.

Stay safe, invest safe.