Shirish Rane, Head of Research, IDFC Securities speaking about the impact of demonetisation by the government said demand is sure to be impacted especially the one that was created by unaccounted money.
However, it would be difficult to calculate or quantify the net impact for the companies yet. Companies in the consumer space, businesses that deal in cash transactions among others are sure to be hit.
The hit on demand will not be only because the unaccounted money is out of the system but there is also limit to withdrawal of new money, which will impact liquidity in the system as a whole, said Rane in an interview to CNBC-TV18.
Talking about the key takeaways from the conference, he said some companies, where in fact looking forward to greenshoots in demand that were visible but now that too will be impacted because of demonetisation. They were hoping for Q3 and Q4 to be better on back of lower inflation, good monsoon but now are skeptical, he added.
When asked on the reason for the huge sell off seen by foreign institutional investors (FIIs), which began even before demonetistaion happened, he said it could also be because usually during November-December people tend to take money off the table. Secondly, dollar too is appreciating, which is bad news for emerging markets as dollar returns lower, said Rane.
However, some of the spaces like auto ancillaries and stocks like Motherson Sumi looks good because they are not impacted by demonetisation. So, one can increase allocations over there.For full discussion, watch video
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