Buoyant stock market may pose risk: Report

Tribune News Service

New Delhi, September 4

The Finance Ministry has flagged the risks emerging from buoyant stock market which has recouped its losses, but the positive trajectory seems divorced from the actual situation on the ground.

In case there is the an underlying disconnect between the real and financial sectors, India could face disruptive market corrections. These could be In the form of capital flight, currency volatility and worsening corporate balance sheets, warned the monthly economic report of the Department of Economic Affairs. 

Monthly Economic Report, Department of Economic Affairs, Finance Ministry

WHAT THE REPORT SAYS…

Some areas that may require specific attention include agrarian supply chains, infrastructure, ICT, startups, financial inclusion, skilling and healthcare. Progress In these areas will sustainably boost economic growth In years to come

Stock markets are on an upward swing due to buoyancy from global surplus liquidity, ebbing investor fears and optimistic prospects of Covid vaccine. “Risk-taking sentiment has returned with global and domestic equity markets on an untamed recovery path, reaching the pre-Covid highs and recouping most of its losses,” it noted.

The report dwelt on points covered by chief economic adviser (CEA) KV Subramanian on the day the government said the first quarter GDP had fallen by 24%. The DEA report also concluded that India was beginning to experience a “V” shaped recovery.