The record boom in the stock markets will prove to be extremely risky

MUMBAI: Despite a sharp decline in the country's economic growth last year, the market cap of the country's companies in major economies rose the most last year, posing a threat to financial stability, according to a report prepared by SBI.

In the Corona era, retail investors have become more interested in stock markets. The number of retail investors has increased by 1.2 crore in FY 2021 and an additional 2.50 lakh in the first two months of the current financial year. Concerns have been raised in the report about whether the addition is long-term or temporary.

The share of individual investors in the total turnover in the stock market has increased from 3% in the last one year to 6%.

Among other financial instruments, low returns, rising global liquidity and ongoing efforts to make money at home due to regulatory measures are the reasons behind the increase in the number of retail investors, said the economist of the country's largest bank.

The BSE Sensex has risen from 2,000 points in April last year to the current level of 5,000.

A boom in the stock market without improving the underlying economy could raise the question of financial stability. SBI's Financial Stability Index improved modestly in April 2021 but was lower than the December 2010 peak. The index is also expected to decline in May, the report warned. SBI's Group Chief Economic Advisor Dr. This report has been prepared by Soumya Kanti Ghosh.

Earlier, the Reserve Bank had warned of risks to financial stability.

The BSE Sensex has risen 1.50 times in the last one year, while other countries such as Russia's stock market benchmark has risen 1.5 times, Brazil's 1.50 times and China's 1.8 times.