SANJAY THAPA
In the post second wave of Covid, the stock market is said to be in a bubble. RBI has forewarned investors, that the overheated market is artificial and is not backed by a corresponding strong fundamentals. It is true that the Sensex has crossed 51K while the nifty touched 15 K recently but given the lockdown in second wave since March 2021, there has been a shakedown of previous GDP estimates by the North Block. This fiscal, the high GDP numbers come in the back of low base of last year.For 20-21 the GDP growth has come down to ( – ) 7.3 per cent despite various measures in the Rs 21 lakh crore Atma Nirbhar Bharat programmes.
Last year, the economy shrunk by 23.9 per cent in the first quarter. But this time, even as there was no national level lockdowns, however several states announced individual lockdowns. May be the provision of two vaccines Covax and Covishield has boosted market sentiments but otherwise economists and financial experts around the world are bewildered at this oddity. Another factor that is said to have boosted investor sentiments is the availibility of free time. Under lockdown, with no other option there has been a surge of about 1.42 crore new investors in last fiscal, working out to over 2 lakh new demat account opening every month. In March alone there was an addition of over 19 lakh new demat accounts opened – the highest in the year. In fiscal 2020 total 49 lakh such accounts were opened.
Clearly there has been a new interest in the capital and stock markets in the corona crisis and shift from other investment avenues like teal estate and gold. Experts hold that even as FPI and FIIs moved out of India in the second wave the domestic investors looked at the long term gains through new investment. Apart from this, the various moves by RBI including monetary easing seems to have pushed more cash in hand of retail investors. With this though there was job cuts and lowering of salaries in the corporate world, the retail investors in India found new way to invest from their savings.
