Effect of demonetisation on companies

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

 

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.

 

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.

 

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

 

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

 

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.

 

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.

 

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?

 

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 ???

 

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)

 

Can anyone kindly name companies which will directly/indirectly benefit from demonetisation?

 

If NaMo is not reelected , who is going to get elected ???

 

I think sales of majority of companies and their NP might get impacted for the next 2 quarters

 

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.

 

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.

 

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?

 

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

 

@RAMA MURTHY SASTRY CHALLA can you be stock specific for PSU banks?

 

Is there any listed company which will gain directly/indirectly due to demonetisation?

 

All the banks, mostly PSUs