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