Stock Market & Actual Market Sentiments are Different Entities: Shaktikanta Das, RBI

Sounding a note of caution, RBI Governor Shaktikanta Das said there is a disconnect between the stock market and the real economy and a correction will be witnessed, though its timing is hard to predict.

The Governor said excess liquidity in the global system appears to be fuelling stock market exuberance. “There is so much liquidity in the system, in the global economy, that’s why the stock market is very buoyant and it is definitely disconnected with the real economy. It will certainly witness correction in the future. But when the correction will take place, it is hard to predict,” Das said in an interview to a news channel.

The RBI is regularly monitoring the market behaviour and its impact on financial sector stability and will take necessary steps as and when needed, he added.

“We are regularly monitoring all market behaviour. RBI is vigilant about the impact of correction on the financial sector and how to deal with it,” he said. Referring to the winding down of six debt schemes of Franklin Templeton Mutual Fund, he said the RBI took a proactive step by opening a Rs 50,000 crore liquidity window for the mutual fund industry.

Das also said the loan moratorium announced by RBI at the onset of the pandemic was a temporary solution for COVID-19-related stress.