Demonetisation to be good for inflation, bond yields, INR: IDFC

Anish Damania of IDFC says demonetisation is expected to be positive for inflation, bond yields and rupee, but it would have a negative impact on GDP and money supply.

Also given the high correlation of sales with M3, sales are expected to be weak in Q3 and receivables are expected to rise, he feels.

Unorganised sectors where business is largely transacted in cash and organised sectors with high cash transactions (real estate) and/or retail facing will see the highest impact in the short term, according to him.

Damania says while banks and select utilities would be the active beneficiaries of demonetisation, oil marketing companies, pharma and IT would be relatively insulated.

He further says the affected sectors would be autos, discretionary consumption, cement, construction, real estate, materials, NBFCs.

Given the near term uncertainty on how liquidity will flow into the system, Damania cut his Nifty target tactically to 8100.