Sharp Jump Of Stock Markets In Economic Slowdown Is Not Right

Sharp jump of Stock Markets in Economic Slowdown is not right: RBI.

The Reserve Bank of India (RBI) has once again raised concerns about staying on top of the stock markets even in this challenging phase of the Corona crisis.

The bank said in its annual report that despite a negative growth rate of about eight percent in the economy during the last financial year, such a sharp jump in the stock markets is not a good sign.

This is expected to cause the stock market bubble to erupt. Shaktikanta Das, the Governor of the RBI, has been expressing concern for some time over the past several months in the midst of the economy’s sluggishness.

In its report, RBI said that the BSE Sensex crossed the 50,000 marks on January 21 and 51,000 on February 15 this year in the stock market.

This shows a jump of 100.7 percent in the Sensex and 68 percent during the last financial year (April 2020-March, 2021) compared to March 23, just before the nationwide lockdown of the previous year.

Given the estimated eight percent shrinkage in the economy during the last financial year, this bounce in the stock markets is not normal and the bubble is expected to burst very deep.

In its report, the bank has also said that it will be able to market during the current financial year.

The bank will ensure adequate liquidity in the market during the current financial year (2021-22), intervening through monetary policies from time to time.

According to the central bank, it will continue the monetary flow in the market while maintaining financial stability.

Cash trend in the market due to epidemic concerns.

RBI has said that the circulation of cash in the market increased during the last financial year. The main reason for this is that people collected cash due to various apprehensions amid the Corona crisis.

According to the RBI, in the financial year 2020-21, the amount of cash in the market increased by 7.2 percent, and their value increased by 16.8 percent.

According to the RBI, the value of Rs 500 and Rs 2,000 notes accounted for 85.7 percent of the value of currency notes in the last financial year.

In terms of quantity, the highest 31.1 percent of the notes were in the 500 rupees. After that, 10 rupee notes with a 23.6 percent share were the most popular.