Rising stock markets amid GDP contraction

By Administrator_ India

Capital Sands

The central bank, in its annual report, has issued caution over the meteoric rise in stock prices at a time when the country’s GDP has contracted.

India’s benchmark indices have more than doubled from the post-pandemic lows made in March 2020. Several individual companies have seen a multi-fold jump in their stock prices. This, even as the economy has headed south.

Not just India, almost all global markets have seen a sharp rebound in their benchmark indices since March last year underpinned by aggressive stimulus measures.

The central bank has quoted research work that highlights factors influencing the stock market. These include economic growth, inflation and money supply.

“The stock price index is mainly driven by money supply and foreign portfolio investor investments. Economic prospects also contribute to movement in the stock market, but the impact is relatively less compared to money supply and FPI,” RBI observed citing an autoregressive distributed lag (ARDL) model, which considers factors such as Sensex movement, economic outlook, and FPI flows.

In 2020-21, domestic equity received the highest-ever FPI inflows at Rs 2.74 trillion ($37 billion). The previous record for highest-ever FPI flows for a financial year was in FY13, when overseas investors had pumped in Rs 1.4 trillion ($25.8 billion), as per data provided by NSDL.

Leave a Reply

Your email address will not be published. Required fields are marked *

Next Post

Dollar near 2-month high vs yen, Chinese yuan scales 3-year high

By Administrator_ India Capital Sands The dollar held near a two-month high against the yen on Monday after a key measure of U.S. inflation showed stronger price gains than expected, keeping alive expectations of an eventual tapering in the Federal Reserve’s asset buying. The Chinese yuan, which has been supported […]

You May Like

Subscribe US Now

Error: Your Requested widget " newsletterwidget-2" is not in the widget list.
  • [do_widget_area fullwidth-homepage-sidebar]
    • [do_widget_area sidebar-1]
      • [do_widget id="search-2"]
      • [do_widget id="recent-posts-2"]
      • [do_widget id="archives-2"]
      • [do_widget id="categories-2"]
    • [do_widget_area widgets_for_shortcodes]
      • [do_widget id="newsletterwidget-2"]
    • [do_widget_area wp_inactive_widgets]