Demonetization’s impact on growth may pan out in the next couple of quarters

India is on top of emerging markets & the decline in markets has made share prices more attractive even though EMs as a group are at the bottom of the heap.

It is very hard to predict the precise impact of demonetization in terms of growth. But, the share prices are a lot more attractive than they were 2 months ago. So, the stocks are worth buying. The growth impact will pan out in next couple of quarters and hopefully the worst in done. India is a very cash intensive economy & to replace Rs 14-15 trillion of currency notes is not a job that will be done overnight.

I think it will take couple of quarters for earnings to rebound. Prior to demonetization, we were in momentum of growth and were looking at a quarter where earnings revision may have turned positive after 6 years. Now this may get deferred by couple of quarters.

It is not tough to identify the multi baggers, but it is tough to actually buy them, stay with them because you get tempted to sell out when the stock goes 20-30-40% above your purchase price. Sometimes these stocks go up very sharply in very short span of time, sometimes it takes considerable time.