Stock market ‘bubble’ a fear for RBI

The Reserve Bank of India (RBI) has once more raised the crimson flag over the query of a bubble within the inventory markets, which surged to document highs even after the Covid pandemic hit the nation.
“This order of asset price inflation in the context of the estimated 8 per cent contraction in GDP in 2020-21 poses the risk of a bubble,” the RBI mentioned.
The central financial institution had raised the inventory market bubble challenge final 12 months additionally when inventory costs skyrocketed.
“India’s equity prices also surged to record highs, with the benchmark index (Sensex) crossing 50,000 mark on January 21, 2021 to touch a peak of 52,154 on February 15, 2021, which represents a 100.7 per cent increase from the slump just before beginning of the nationwide lockdown (i.e., since March 23, 2020) and a 68.0 per cent increase over the year 2020-21,” the RBI’s Annual Report for 2020-21 mentioned.

On August 22, 2020, RBI Governor Shaktikanta Das mentioned there was a transparent disconnect between the sharp surge in markets and the state of actual financial system, as surplus international liquidity was driving up asset costs worldwide.