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D-Street made Rs 43 lakh crore in 3 years since cash ban; and these stocks made the most

Friday marked three years of Prime Minister Narendra Modi’s shock announcement of demonetization, through which he had tried to dig out unaccounted wealth lying in cash.

Days after the move, for many months there would be long queues of common men and women to deposit money in banks and withdraw cash from ATMs.

That dried up cash in the economy and sent stocks plunging to new lows, with some after-effects still being felt across segments of the economy.

Modi made the announcement banning currency notes of Rs 500 and Rs 1,000 denominations on November 8, 2016. In eight sessions following that, the benchmark BSE Sensex cracked nearly 7 per cent, or 1,800 points, to hit 25,765 on November 21.

Sensex has rebounded ever since, and gone through another roller-coaster ride to scale its new record high of 40,688 on November 7, 2019. In between, the 30-pack navigated many new headwinds, such as GST implementation, Sebi reclassification of mutual funds, credit crisis in NBFCs and global trade tensions.

The 30-share index has risen 47 per cent in last three years, with over 10 per cent of stocks in the BSE 500 index rallying more than 100 per cent.

Adani-group firm Adani Transmission has rallied the most during this period at 550 per cent. It was followed by HEG (490 per cent), Procter & Gamble (up 479 per cent), Indiabulls Ventures (up 445 per cent), Bajaj Finance (up 330 per cent) and KEI Industries (up 308 per cent).

Investors on Dalal Street became richer by over Rs 43 lakh crore during this period, as aggregate market capitalisation of BSE-listed firms jumped to Rs 154 lakh crore from Rs 111 lakh crore on November 8, 2016.

Shares of Graphite India, NIIT Technologies, Venky’s India, Bata India, Vinati Organics, Deepak Nitrite, Jubilant FoodWorks, Honeywell Automation, VIP Industries, Adani Enterprises, Astral Poly, Sunteck Realty and Titan Company have advanced 200-300 per cent during this period.

Table: BSE500 stocks which rallied over 100% in 3 years

Demo table 1

Demo table 2

Sectorwise, the BSE Consumer Durables index has been the best performer since demonetization, advancing 100 per cent. BSE IT, Bankex, Realty, FMCG and TECk indices have gained 40-58 per cent.

Siddharth Sedani, Vice President for Equity Advisory at Anand Rathi Shares & Stock Brokers, said he continues to be positive on consumer durables, despite the recent miss by Titan in Q2.

“Some stocks like Blue Star also have potential. We also like HUL, Godrej Consumer in the FMCG space. Once, the rural market revival comes in these companies will again pick up in terms of volume growth,” he said.

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “Demonetisation did leave many willing homebuyers cash strapped for a while but only to infuse the system with greater transparency. The buyer is confident now that builders or real estate agents cannot cheat him and cannot demand unaccounted money. The move also pushed banks to go in for home loan rate cuts, making buying homes cheaper.”

Telecom, Auto, Healthcare and PSU indices slid between 8-19 per cent in these three years.

The Sensex traded over 150 points down on Friday after Moody’s Investors Service changed the outlook on India’s ratings to ‘negative’ from ‘stable’, saying there was increasing risks that economic growth will remain materially lower than the past.

Some blamed that the ongoing slowdown on the after-effects of demonetisation.

In a survey conducted by online community platform LocalCircles, around one-third of the participants said the ongoing economic slowdown was the biggest negative impact of demonetisation, while 28 per cent said the move had no negative effects at all.

Around 32 per cent of respondents said the note ban caused loss of earnings for many unorganised sector workers.
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