Demonetisation pain unlikely to be beyond two quarters: CLSA

Mahesh Nandurkar of CLSA says the government's well-intentioned currency demonetisation move has created business disruptions for the near term.

He believes the pain is unlikely to be significant beyond two quarters, except in property and related sectors viz, housing finance/cement.

He also believes the scheme would be a success if at least USD 30-40 billion doesn't return into the system, which provides enough room for fiscal stimulus. Else further intensification of crackdown against black money can drive adverse market sentiments, he says.

Assuming the scheme succeeds, he sees a limited 5-8 percent downside to FY18 Nifty earnings estimates and views the market weakness as a buying opportunity.

Of the stocks that have underperformed in the recent fall, top picks would be Arvind, Tata Motors, Maruti Suzuki, IDFC Bank, IndusInd Bank, ITC and Zee Entertainment, Nandurkar says.

Meanwhile, Sakthi Siva of Credit Suisse says the pace of net foreign selling has slowed in emerging markets. In fact, foreigners turned net buyers yesterday for the first time since October 24.

Markets had net foreign selling of USD 10.1 billion in October and so far in November.