Banks winners in Modi bid to clamp down on black money: Vaibhav Agrawal

The latest reforms are positive for the markets as we expect banks to see strong deposit growth and higher liquidity, said Vaibhav Agrawal, VP & Head of Research, Angel Broking Pvt Ltd, in an interview to ETMarkets.com Kshitij Anand.

The biggest monetary reform was taken by the government on black money. What are your thoughts?

This is a brilliant move by Modi government which has taken the fight against corruption and black money to the next level. The tax evaders will now be forced to convert their undisclosed money through legal route and the same will not go unnoticed and failure to do this means their money is worthless. So, this is indeed a masterstroke.

Modi walked the talk when he assured Indian people that he will bring back black money into the system. Do you think he has added another 5 years to his tenure and a big impact on UP elections?

Since the beginning, the PM’s focus has been more on an image makeover, good governance and reforms. He started with, building strong foreign relations, then he made the administrative structure more efficient and reform ready and now he is rolling out reforms.

In our view, this is a very structural approach and while there could be some short-term hiccups, long term benefits will be very strong. If the ball continues to roll in favor of the people of India thereby benefiting the economy, the results will be positive

Do you think this move alone has strengthened the fundamentals of Indian economy and investors will be more than willing to buy on dips?

Yes, definitely this improves lots of things. First is the image that India carries globally, which would see a huge improvement. This also helps in improving the ease of doing business in India.

Remember, a lot of trade earlier used to happen in cash but with the latest move, a lot of trade will have to be executed either electronically or through cheques. This will help to increase tax collection as tracking one's earnings will be easier.

What is the kind of impact you foresee on markets as 'it can't get bigger than this'?

Improving fundamentals of the country is always a good for the markets. We believe the latest reforms are positive for the markets as we expect banks to see strong deposit growth and higher liquidity.

While real estate may see some negative impact on prices, in long term it will boost the demand for homes.