After opening the day on a flat note, the Indian share markets have continued to trade flat, and are trading just below the dotted line. Sector indices are trading on a mixed note with stocks in the IT sector and FMCG sector trading in the red. Stocks in the banking sector are witnessing maximum buying interest.
The BSE Sensex is trading down by 28 points (down 0.1%) and the NSE Nifty is trading down 7 points (down 0.1%). Meanwhile, the BSE Mid Cap index is trading up by 0.1%, while the BSE Small Cap index is trading flat. The rupee is trading at 67.93 to the US$.
The demonetisation drive may have ended on 30 December 2016, but there is no doubt that it has had its effect on the way Indians spend their money.
According to a leading financial daily, the purchasing sentiment of Indians during December fell steeply by 0.42 points with the Buying Propensity Index (BPI) standing at 0.26 points, a nine-month low. The BPI in November 2016 had stood at 0.68 points.
The BPI, measured on a scale between -1 to +1 is a quarterly index that measures the buying keenness among consumers. With a higher number signifying higher propensity to buy, and a lower number signifying the opposite.
The steep decline in the BPI can be attributed to a single major event that occurred in November -Â demonetisation. Majority of consumers facing a cash crunch were expectedly not keen to splurge on any purchases other than essentials.
The December fall was when the pain of demonetization began to be felt more severely after the first salary cycle post-demonetisation announcement in December, and the impact of the enduring business and personal hardships was felt by citizens.
The Index, based on research across 3,000 consumers- influencers across the eight tier I cities, found that Delhi was most severely impacted with a month-on-month fall of 122 per cent in citizen keenness to buy, registering a negative sentiment in December at -0.14, followed by Kolkata with a BPI fall of 90 per cent.
