Effect of demonetisation on companies

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by Manmohan Gupta, Nov 13, 2016.

  1. Manmohan Gupta

    Manmohan Gupta Member

    Joined:
    Nov 13, 2016
    Messages:
    55
    Likes Received:
    11
    Hello friends,

    The Govt has demonetised currency notes of INR 500 and 1000.

    Can we have some inputs regarding which companies will be impacted by this move? This will help novice investors like me to make necessary changes to portfolio.

    Thanks and regards to all
     
  2. Farhan Ghumra

    Farhan Ghumra Active Member

    Joined:
    Nov 11, 2015
    Messages:
    223
    Likes Received:
    105
    My analysis from news and stock price movement

    Real estate will have deep impact because black money investment is done into it. If real estate get hit then cement, paint, centenary wares, housing finance sector will also get hit.

    Next sectors will be companies related luxury auto, entertainment/restaurants, high-end branded products and consumer durable/non-durables due to less liquidity.

    Micro finance institutions will also get hit, MFIs repayment and disbursement are on hold due to cash shortage. The microfinance industry is cash-intensive. Most of the borrowers take loans in cash and they repay loans in cash.
     
    Manmohan Gupta likes this.
  3. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    317
    Likes Received:
    205
    If you are a stock trader then needless to worry but if you are an investor then also no need to worry at all. My opinion is that this all political bullshit will have no impact to curb the black money even in long term. Things will get settled down within 1-2 months.

    Go to hunt "real estate" companies with the help of any SEBI registered financial adviser. Modi Plan will fail and companies will shoot up soon.
     
    Manmohan Gupta and Faisal like this.
  4. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

    Joined:
    Sep 8, 2015
    Messages:
    3,661
    Likes Received:
    1,973
    demonetised currency notes of INR 500 and 1000
    in my view it is a good step for medium to long term

    short term Effected Areas :
    Real estate , Film Division , Politicians , Fisheries & Aqua , Tourism , Hotels, Electronics , Costly branding Textile , jewellery sector , construction equipment , consumer durables , print media , computers sales , Automobile ,
    Textile Ordinary (may effect this quarter due to sales slowdown because of Notes shortage)
    construction , cement , metals , Transportation

    short term Benefited Areas :
    Mainly Banking sector especially PSU Banks,
    NBFC (due to some black money go to repayment of loans )
    i think next quarter NPA come down to all banks it is only estimation it may not correct
    FMCG , paper, pharma

    Note :
    this is only for Learning purpose may be my views are not correct , based on your own analysis and your risk apatite take decisions .....
    ALL THE BEST
     
    Manmohan Gupta and Faisal like this.
  5. Karan Batra

    Karan Batra New Member

    Joined:
    Oct 17, 2016
    Messages:
    4
    Likes Received:
    3
    I agree with @RAMA MURTHY SASTRY CHALLA on the view that a lot of black money would go into the repayment of loans and the NPA's may improve
     
    Last edited: Nov 14, 2016
  6. Equilogic

    Equilogic New Member

    Joined:
    Oct 24, 2016
    Messages:
    2
    Likes Received:
    0
    Short term impact (2-3 quarters, if you qualify it as a short-term) will be felt severely on the adverse side, across almost all the sectors, including banking and financial services. Public sector banks, though looks attractive, due to CASA surge, their short term benefits will be neutralised over medium term.

    All consumption themes, rural and urban, will face headwinds, and also the supply side sectors to them. This act of demonetisation will pain all the investing bets that were built on good monsoon and seventh pay commission plus OROP relating expected consumption boom.

    Selected infrastructure stories (where the key client is government), selected PSUs, Export oriented themes and some large B2B plays may suffer less.

    Disclaimer: Purely personal views, use your own analysis and discretion.
     
  7. elegantly_wasted

    elegantly_wasted Member

    Joined:
    Nov 14, 2016
    Messages:
    23
    Likes Received:
    5
    In my view the black economy will just stumble a bit, get up again and continue flourishing.

    Modi isn't going to be reelected. BJP stands to loose overall (politically) through this action of theirs. It would be good if Modi partially rolls back this by re-monetising the old 500/- Rupee notes.

    This is just my personal view.
     
    Guru Vachaal likes this.
  8. elegantly_wasted

    elegantly_wasted Member

    Joined:
    Nov 14, 2016
    Messages:
    23
    Likes Received:
    5
    How would this work? How could one use his black money to repay one's outstanding loans from banks and NBFC's

    And does this mean than corporates (NPA's and others) hold black money as well which they will use to repay their NPA loans?
     
  9. w4wealth

    w4wealth Well-Known Member

    Joined:
    Oct 16, 2015
    Messages:
    1,042
    Likes Received:
    339
    black money may flourish again due to people dont want to change any system . But demonetisation will definitely destroy some part of black economy.
    NaMo's image through demonetisation decision has only impacted positively. so he will be reelected in 2019 and 2024. that is Need of India.
    One question . If NaMo is not reelected , who is going to get elected ???
     
  10. elegantly_wasted

    elegantly_wasted Member

    Joined:
    Nov 14, 2016
    Messages:
    23
    Likes Received:
    5
    The stumble that I referred to. Point is black money will flourish and that is not because people dont want to change the system but because Indians are inherently corrupt and solutions are already emerging to circumvent this demonitising move. What is of interest to me is what are Namo's next measures to attack black economy - benami, gold, offshore, shell companies, laundering, addressing root causes of generation of black money, legal infrastructure and effective implementation of legislation.

    Corruption will prevail/be elected, for Indians are inherently corrupt and this includes the BJP - its just different shades of black.

    Good and bold move though but its still sabse bada rupiya and rupiya wins elections.... my domestic help voted for BJP last time around on being paid Rs500/- the last time around.

    But friends someone please explain how can black money be used to repay NPA loans (never heard it as a productive use of black money)
     
    Last edited: Nov 14, 2016
  11. Manmohan Gupta

    Manmohan Gupta Member

    Joined:
    Nov 13, 2016
    Messages:
    55
    Likes Received:
    11
    Can anyone kindly name companies which will directly/indirectly benefit from demonetisation?
     
  12. w4wealth

    w4wealth Well-Known Member

    Joined:
    Oct 16, 2015
    Messages:
    1,042
    Likes Received:
    339
    If NaMo is not reelected , who is going to get elected ???
     
  13. good stocks

    good stocks Active Member

    Joined:
    Apr 16, 2015
    Messages:
    480
    Likes Received:
    137
    I think sales of majority of companies and their NP might get impacted for the next 2 quarters
     
    w4wealth likes this.
  14. New_Investor

    New_Investor Active Member

    Joined:
    Sep 5, 2015
    Messages:
    522
    Likes Received:
    177
    Re-monetising (partly or whole) is not possible. This will tarnish BJP's image completely. Also Country's image in the eyes of international investors will be spoiled. So rollback is not possible. You take such a big decision which will affect the masses and then you roll back. Not possible. Public will not spare you.
     
  15. New_Investor

    New_Investor Active Member

    Joined:
    Sep 5, 2015
    Messages:
    522
    Likes Received:
    177
    Banks are getting huge deposits. They are becoming financially stronger. Mainly SBI. Bad loans may or may not be refunded. But banks are getting more money. So their financial condition will surely improve. However, It is possible that they may lend this money to CHOR companies and create more NPA.
     
  16. New_Investor

    New_Investor Active Member

    Joined:
    Sep 5, 2015
    Messages:
    522
    Likes Received:
    177
    RMSC Sir, How FMCG? Most of the FMCG products are sold by small retailers (/local baniyas) and these small retailers sell in cash not online or using plastic money (credit or debit cards). Due to cash problems, business of these small retailers has nearly halved (/ fallen 50%) as people are cutting down their expenses to save cash. So how FMCG will benefit?
     
  17. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

    Joined:
    Sep 8, 2015
    Messages:
    3,661
    Likes Received:
    1,973
    yes , you are correct sir .... FMCG also affected temporary this quarter ....
    i wrongly estimated FMCG and NBFC
    in long term FMCG is best
    Reality and Retail sectors affected more in this quarter
    Reality and Infra sector may take long time to recover ....
    in this issue "PSU " banks are most benefited sector
     
  18. Farhan Ghumra

    Farhan Ghumra Active Member

    Joined:
    Nov 11, 2015
    Messages:
    223
    Likes Received:
    105
  19. Manmohan Gupta

    Manmohan Gupta Member

    Joined:
    Nov 13, 2016
    Messages:
    55
    Likes Received:
    11
    Is there any listed company which will gain directly/indirectly due to demonetisation?
     
  20. Mukund

    Mukund New Member

    Joined:
    Jul 4, 2016
    Messages:
    21
    Likes Received:
    5
    All the banks, mostly PSUs
     
    Manmohan Gupta likes this.
Loading...