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• Demonetisation has hit grey markets hard, with interest rates for grey market loans having fallen to historic lows from 30% to below 5%, since most money lent was black in 500 and 1000 notes. In addition, investors of real-estate, who have been buying land with black money, are especially struggling to sell land in light of the government promise to crack down on 'benami' properties. 

• Tata Global Beverages - which owns Tetley teas and has a joint venture with Starbucks in India - released results showing a 48% increase in Q2 profits. The stock is up 5% on the heels of the announcement. However, that news was overshadowed with the announcement that TGBL has ousted Cyrus Mistry as its Chairman - the first Tata group company to fire him since Tata Sons removed him from the board. Mistry is currently still Chairman at Tata Steel, Tata Motors and India Hotels. 

• Interest rates in India are set to go down, SBI Chief Arundhati Roy has said, now that bank accounts are full of funds post-demonetization. Banks have parked more than Rs 80,000 crore with the RBI in the past few days through various liquidity operations windows. Home loans are likely to become a lot cheaper over the next six months with interest rate cuts, likely dropping to 7-7.5%. 

• Stock in spotlight: Investors have turned bullish on housing loan companies like CanFin Homes, which tops the gainers screener today. These stocks are rising on the heels of the SBI Chief's statement that interest rates are set to drop, which will make home loans more affordable and boost housing loan firms.  

• Photo of the day: A cricket game in progress in Srinagar, Kashmir Guardian/Saqib Majeed

 As the demonetization juggernaut makes its way through the markets, we can assess the impact of it on various assets. One thing is clear: the government is not budging from its stance, and no rollback is likely, with the Supreme Court also refusing to stay the government order.

In addition, the PM has made clear that this is the first of a longer crackdown on the informal and black economy, with the focus moving to property and gold as well. The immediate impetus for the government's move may very well have been the rising NPAs for banks. The large influx of cash into the banking sector is exactly the kind of event that the banks needed to address balance sheets overloaded with debt. As the informal economy crackdown continues, execution of these reforms will be an important piece to watch, since the black economy has deep roots in Indian markets, and each event will cause a fair bit of upheaval. 

Overall though, while the media has focused its coverage on the chaos outside ATMs and banks, the long-term impact of the move is likely to be a healthy one, boosted by the large bank deposits and tax revenue collections.

An additional step that the government could take in the coming days to address the cash crunch the people, particularly the low-income are facing: an Aadhaar-linked cash transfer for the poor, to help tide over their difficulties. 

How will demonetization impact Real Estate?

In the days after demonetization, real estate brokers have begun to make some calls. "The buyer wants to pay 20% of the amount in old notes," they would tell the property seller. In the cases of family estates, with multiple bank accounts available for people to deposit old money, the percentage of old notes went up even higher, according to sources.

But with the government promising scrutiny of deposits, people are growing cautious. This is impacting the real estate market in India, and experts expect prices to fall across the country, especially in Tier 2 and 3 towns, where much of the economy runs on cash. Major real estate companies like DLF, Godrej Properties and Oberoi Realty have lost between 10-16% of their market value in the past week. Analysts are expecting real-estate prices to fall over the long term with the black money component becoming smaller, but that remains to be seen. Housing finance companies will also be affected, as households with these loans face a liquidity problem. 

Indians keep their faith in gold

Indians' belief in gold as the safest asset has only grown stronger since demonetization, with many families converting old notes to this asset. However, scrutiny on jewellers has also increased since the move, so it remains to be seen how the gold markets will shape up in the long term as 'processing points' for black money. 

Flight tickets and consumer goods hit

These industries were coming off their post-festival high, and have hit the ground with a big thud thanks to demonetization. Sales of flight tickets are down, as plans for winter vacations have to wait as the richer households sit this season out. Sales of consumer goods will also be muted this quarter as savings shrink or become unpredictable as banking infrastructure remains overloaded in processing demands for cash withdrawals and exchange of notes. The move to have an indelible ink mark on the fingers of people withdrawing money to keep to the daily limits will also mean that avenues for additional liquidity are being closed off. 

Debt markets are the winners from demonetization

Worth noting here: so far, the rupee value has not shifted down considerably, despite the dollar rising on the Trump victory. Interest rates are likely to now fall since inflation pressures have faded, with fewer purchases happening. Limited supplies in North Indian markets at least for the next week due to the inability of trucking companies to keep the fleets running will exacerbate the problem for consumer essentials as well in the short term. In the longer term, government revenues are set to go up with additional money entering the banking system and increased tax collections. All this means that an interest cut is likely to happen in the coming months, a boost for debt markets.  

Photo: an auto driver refuses the old 500 rupee note. Associated Press

• US President-elect Donald Trump sounds more and more like a typical Republican (if anti-trade) candidate as his office takes shape. US markets have as a result recovered while Asian markets including India have continued to slump as investors pull out money to reinvest into US stocks. The Indian Sensex, which fell by 500 points in early trading, is also experiencing the double whammy of demonetization, which has created a cash crunch in the stock market. Flight ticket sales are also down, and airline officials believe that this is due to the fact that people typically making winter travel plans are currently scampering to figure out what to do with their high-denomination currency. 

• Even as the Tata Motors independent directors have expressed support for beleagured CEO Cyrus Mistry, saying in a letter  that all board decisions were unanimous and backed the Chairman, Tata Motors results had Q2 profits missing estimates. New JLR models however are expected to drive sales up the next quarter. The stock has fallen 7.6% in today's trading. 

• The launch of Reliance Jio with its cheap data and free calls has brought new users into the market, resulting in high sales for low-cost smartphones. The head of Ericsson estimates that the smartphone user base in India will hit 800 million within the next four years, marking a shift for India into a primarily IT-enabled economy. 

• Stock in spotlight: JSW Energy has hit a new 52 week low in the past week. The company is struggling under higher coal prices and falling utilization of its plants. 

• Photo of the day: A supermoon rose around the world yesterday. Here, a shot from Australia. Getty

• Banks have got a cash bonanza in deposits over the last four days, with over 3 trillion rupees ($44 billion) entering the banking system. While FM Jaitley had proclaimed that undeclared assets now deposited in banks would result in a 200%+ penalty, tax officials are uncertain how to go about executing this, since current tax laws don't allow for such an automatic penalty on these deposits. Additionally, according to tax lawyers the clients calling their phones most troubled by demonetisation and old cash reserves are from the 'government sector', who worry about exposing themselves if they now use their old notes stash for gold or other assets. The PM announced yesterday that the government would now target benami properties and gold being bought with black money.

• The Nifty Bank P/E hit new three month highs last week despite weak SBI results. One reason here could be Donald Trump's election win - bank stocks have risen around the world with his victory, since Trump has promised to roll back key regulations and reforms that countries had put in place post the 2009 banking crisis. This would reduce regulatory costs for the banking industry, especially if the Basel 4 norms being finalised end up being symbolic. Banking stocks in India have also received a boost due to the large cash deposits coming in over the last few days. 

• Stock in spotlight: Vedanta and smallcap stock Swan Energy gained against stock market trends, and are presently well over their 200 day SMA.

• Photo of the day: Old high-denomination notes kept in buckets at a bank in Kanpur, as crowds arrive to deposit money. Adnan/Abidi/Reuters

Research Reports Summary for the week!

Over 80 stock reports landed this week. Stock picks of the week from analysts are Sun Pharma, whose recent fall in pricing triggered BUY recommendations from three analyst reports - ICICI Securities, Angel Broking and Reliance Securities, and Hero Motocorp, with two BUY recos from analysts.

As investors try to predict the impact of Donald Trump's election as US President, Asian stock markets are trending downwards. The impetus has been the rise in US bond yields on expectations that the new government's policies will result in higher interest rates.

This assumption is driving money outflows from Indian and other Asian markets. FIIs have begun heavy selling in the Indian market, dumping shares worth over Rs. 2,000 crores. Most Asian currencies including the Indian rupee have fallen against the dollar.

The 100 day plan for the new US administration may follow the blueprint released by Trump during his campaign, which focused on ending illegal immigration, increasing domestic spending and withdrawing from international trade agreements. These are likely to impact Asia significantly if President Trump follows through on these promises - FIIs and investors in Asia expect that the immediate impact will be higher US interest rates and more domestic spending, as the new government tries to deliver quick results in the first year. 

What is likely to happen: Big domestic spending in the US economy will result in higher outflows from India and Asia

President-Elect Trump has promised big domestic spending ($1 trillion over ten years) on infrastructure projects, as well as tax cuts - a 35% tax cut for middle class families - to boost jobs. Investors think this could boost US economic growth in the short term, and will also result in an interest rate hike, which will pull more money out of Asian markets. 

What may happen: Anti-trade moves, and targeting China

Trump may be the most anti-trade President the US has had in decades: he has committed to exiting the free trade NAFTA agreement with Mexico and Canada, ending the offshoring of jobs by US companies, and also promises to term China a 'currency manipulator' and slap a 45% tariff on all Chinese goods being imported into the US. This puts US - China relations in a complicated position, and Trump's stance that all trade agreements are up for renegotiation makes the various deals Obama signed with Japan, India and other countries in an uncertain situation. Much of this will be unclear until Trump moves into the White House and makes his first announcements.