Do you invest in the stock market? Listen to the RBI governor

New Delhi, Saturday 22 August 2020

One question that has been constantly asked for the past few months is that the stock market is skyrocketing at a time when the economy is weakening due to the corona. Looking at the movement of the stock market, it does not appear that the economy is in serious danger. Reserve Bank of India (RBI) Governor Shaktikant Das warned shareholders that the stock market situation does not really look like the economy, so it could decline. What Shaktikanta Das has said on this issue is serious and needs to be remembered.

Need to be careful about the stock market

Pointing to the need to be cautious in the stock market, Shaktikant Das said that the market does not seem to be in sync with the real economy. In such a scenario, the direction of the stock and the market will definitely change in the near future. He said it was difficult to predict when the market would improve. The RBI governor said the stock market rally was being boosted by the availability of more cash in the global financial system. As you know, the central banks of all the countries have issued millions of rupees to revive the economy from the Korono crisis. The boom in the stock market is the result of this.

Liquidity is very high in the financial system

"There is a lot of cash available in the global financial system, which is why the stock market is showing a bullish trend," Das told a news channel. This is completely different from the state of the real economy. Its direction will improve in the near future, but it is difficult to say when it will happen. He said the Reserve Bank was constantly monitoring the state of the market. Keeping in view its impact on the stability of the financial sector, the RBI is constantly monitoring market transactions and taking necessary action whenever necessary.

It is noteworthy that due to the crisis of Koro when the country-world economy is in recession. With the stock market expected to decline by up to 20 per cent in the first quarter of this financial year, the stock market continues to rise. Because of this, many experts have warned before that there is no link between the stock market and the real economy. But this statement of the Governor of the Reserve Bank is very important.