January 6, 2017

Demonetisation unlikely to hit Q3 hard

Any fallout of demonetisation on third quarter earnings is likely to be cushioned by the positive impact of a good monsoon, Seventh Pay Commission payouts and a robust festival season. Also, key sectors, such as pharmaceuticals, information technology, commodities and oil & gas are least affected by demonetisation, largely due to the global nature of their businesses and minimal exposure to retail consumers. Close to half of all Nifty companies belong to these sectors.

Low probability

According to market analysts, December quarter earnings may not be all that bad for Nifty 50 and large companies. “The probability of earnings declining by double digits in Q3 is very low. Forty-five out of 90 days have been good due to festive season. The first half was also good,” said Harish Krishnan, Vice-President — Fund Management Equity, Kotak Mutual Fund. Most companies in the Nifty100 will also see not much impact from demonetisation

Read more at http://www.thehindubusinessline.com/markets/noteban-unlikely-to-hit-q3-hard/article9461526.ece

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