Motilal Oswal - MOSL: ECOSCOPE-No extraordinary surge visible in currency demand-Cash-to-GDP ratio remains lower than pre-demonetization levels

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Motilal Oswal

Nikhil Gupta

MOSL: ECOSCOPE-No extraordinary surge visible in currency demand-Cash-to-GDP ratio remains lower than pre-demonetization levels

ECOSCOPE: No extraordinary surge visible in currency demand; Cash-to-GDP ratio remains lower than pre-demonetization levels

In this note, we assess the currency situation in India amid media reports suggesting a currency shortage due to an unusual surge in demand for cash. We note that currency in circulation (CIC) rose by INR603b between 31st March and 20th April this year, which is not unusually higher. CIC rose 3.3% YoY in the first 20 days of April, which is exactly in line with the average of 3.3% seen during the same period in 2013-2016.

At INR18.9t, CIC is higher than the pre-demonetization levels, but, in our view, lower than what it would have been if demonetization had not happened. Cash-to-GDP ratio is also lower at 10.9% vis-Ã -vis last-five-year average of 11.8%.

Although ATM withdrawals have increased continuously post-demonetization, the share of ATM withdrawals in overall card usage remains stable at ~76%, lower than the pre-demonetization level of ~85%.

27/04/2018 4 EN

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Motilal Oswal

Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.

Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.

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Analysts

Nikhil Gupta

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MOSL: ECOSCOPE-No extraordinary surge visible in currency demand-Cash-to-GDP ratio remains lower than pre-demonetization levels

MOSL : HOME FIRST FINANCE COMPANY: Earnings in-line with sustained improvement in asset quality

MOSL : SHOPPERS STOP: Ticking the right boxes

MOSL : ERIS LIFESCIENCES: Enhanced efforts toward product launch-related activities

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