Record India Stock Run Is Increasing Risks for Nation’s Economy

  • Bloomberg
  • Stock Market News
Record India Stock Run Is Increasing Risks for Nation’s Economy
Credit: © Reuters.

(Bloomberg) -- India’s record-breaking stock rally may be enriching investors, but it is posing risks for the nation’s economy, according to Bloomberg Economics. 

The economy’s vulnerability to a market setback has increased given/amid the sharp run-up in gains. And a retreat for the Nifty 50 Index, trading at about 35% above its historical trend level, would reduce gross domestic product by 1.4% in the same quarter of the shock and by 3.8% over the following year, Ankur Shukla, an economist with Bloomberg Economics, wrote in a separate note. 

“The higher stocks climb, the greater the risks to the economy if they correct -- an important consideration at a time when the Federal Reserve is weighing the timing of tapering stimulus,” Shukla said. 

The Nifty 50 has rallied nearly 26% this year, the best-performing major stock index in Asia, despite the fresh waves of Covid-19 outbreaks in the country. Investors have been betting on a a pick-up in consumer demand, record-low interest rates and improving prospects for the manufacturing sector.

As a result, the Nifty is now trading at 22.2 times estimated 12-month earnings, well above its five-year average of 18.5. By comparison, the MSCI Emerging Markets Index is trading at a multiple of 12.7. 

 

 

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
  • suresh naren @suresh naren
    India lead by Asian market
    Like 0
  • PRAMOD KUMAR NAYAK @PRAMOD KUMAR NAYAK
    U should need more research abt india...Mr. Economist...India is going to be a giant of Asia....almost equal to china economy by 2035...
    Like 4
    • ashish tiwari @ashish tiwari
      keep dreaming. Stupidity at its best. By 2035, what is your logic. how a,stupid country where citizens wants free electricity, free food, subisidy, reservations
      Like 3
    • Sachin Sharma @Sachin Sharma
      @ashish tiwari THESE THINGS ARE ALREADY FREE IN SCANDANAVIAN COUNTRIES......
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
  • Rakesh Prasad @Rakesh Prasad
    Sensing some kind of jealousy burning.
    Like 1
    • ashish tiwari @ashish tiwari
      Gdp down stock market up canmot continue for a long time
      Like 1
    • Sachin Sharma @Sachin Sharma
      @ashish tiwari economy and stock market cant run together otherwise economists would be richest in the world....stock markets are always 6 months ahead of economy
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100
  • Sridhar N Rao @Sridhar N Rao
    Gloomberg writes usually like this about Bharat (India)! So, it means what is happening is Good for us!
    Like 1
  • Chandrakant Shah @Chandrakant Shah
    Here in India, correction means up, up and up. If market corrects, nfty will rise further to 20, 25,050k and eventually 100k. India is a gold mine
    Like 7
  • Sudarshan Parab @Sudarshan Parab
    In fact, Indian Market is now corrected after huge dip amid COVID-19. If that dip wouldn’t happened, still the market would have grow steadily and reach today’s situtation.
    Like 3
  • Kartik Kohli @Kartik Kohli
    Kuch bhi matlab
    Like 1
  • VIRODUX DITACT @VIRODUX DITACT
    Lol, Totally stupid article
    Like 7
  • Trishul Rawool @Trishul Rawool
    nonsense. India growth story is just beginning. Indian Economy and Indian Stock market will keep rising to newer and newer highs for next 25 yrs.
    Like 13
  • Rathish Kumar @Rathish Kumar
    well defined...
    Like 0
  • maneesh singh @maneesh singh
    The rise of INDIA,( much awaited )Foreign markets not doing well ?  So Sad.
    Like 4
  • Ashish Kumar @Ashish Kumar
    He doesn't explain how exactly stock prices affect the GDP.
    Like 7
  • Tarang Shah @Tarang Shah
    does anyone care here?
    Like 4
  • Vishnu VV @Vishnu VV
    Risk "if" its Corrected. Consolidation (pull back) will have small impact and subsequent catch-up potentially will stabilize the NOW rise in indices.
    Like 1
  • Rakesh Gupta @Rakesh Gupta
    Bigs are waiting till retail are invested above there head then BOOM and all gone...thats the way Capital Market works..
    Like 2
    • Trishul Rawool @Trishul Rawool
      No, thats not how market works. Indian stocks are rising becoz Indian economy is looking bullish for next 3 decades. All the foreign and domestic big investors are betting on Indian Economy. Indian economy and stock markets can give best returns for next 3 decades. This is exactly the same way China rose. Now, India is rising...
      Like 5
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100

Related Articles