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Demonetisation Hits Manufacturing - Biggest Fall Since March 2013
Dec 2, 2016

The manufacturing Purchasing Manager's Index data is out for the month of November. The index measures expansion or contraction in the business activity. A reading above 50 indicates expansion. A reading below 50 indicates contraction

The index is down by 3.9% on month on month basis. Biggest fall since March 2013. On an absolute basis, India's Manufacturing PMI now stands at 52.3, down from 54.4 last month when it touched 22 month high levels.

As reported in Business Line, the decline in the PMI index for November is attributable to sudden withdrawal of high-value bank notes. The money crisis hampered production growth. It's still been less than a month, yet various businesses have been feeling the heat of the cash shortage.

While the government has assured that this a temporary phenomenon, the shortage of the currency notes will not be over any time soon. And in that case one may expect further contraction in the PMI index. The impact could be seen in the companies' performance too.

In such uncertain times, one could do well by considering buying the safe stocks. Some of the bluest of blue chips that have been trading at premium valuations could offer buying opportunity during this temporary down cycle of the businesses.

We have a special report on Safe stocks, which could possibly be amongst the best ones to bank on for the long run.

Data Source: Business Line, Equitymaster Research

This Chart Of The Day was published in The 5 Minute WrapUp - How to Make a Killing by Paying Zero Attention to Demonetisation

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