Gautam Trivedi, CEO, Religare Capital Markets
The full impact of demonetisation has not been completely understood yet. If you talk to companies today, they have a vague understanding of what it might entail. I don’t think companies and consumers are really braced to face the impact of demonetisation. The impact of this move will unfold in the next two to three months. We are not recommending buying the market at this point because there is too much uncertainty about the absolute cash under circulation and no clarity of how big a hit will overall consumption take and, if that indeed happens, what will be its fallout. While interest rates coming down will be a longer term positive, earnings and the topline will clearly be impacted. Most two-wheelers and commercial vehicle companies would face pressure. At this point of time, it is difficult to assess at what valuation the market will bottom out.
Jyotivardhan Jaipuria, founder, Veda Investment Managers
The market was looking expensive prior to demonetisation and the US elections. But the recent correction and macro developments have improved the three-year outlook. Demonetisation should allay worries about the government shying away from big-bang policy decisions. The onset of GST in the new fiscal year will also lead to re-rating in the medium term. Yes, there will be an earnings impact, but markets would focus on future growth prospects rather than past deceleration. People were hoping for a recovery in earnings, but that will now be delayed by a couple of quarters. Whenever there is change, there is a bit of disruption. But by February, if things begin to normalise, the market will ignore the earnings drop as a one-off. Investors should buy every dip and we can see market giving 15-20% compounded growth over the next few years.