Indian stock markets at all time high: The Indian stock market have touched all-time high, and the retail investors participation is also at one of the record levels. The number of retail investors registered on the stock exchanges have crossed 7 crores mark which is vast achievement. The retail investors participation is at all time high which shows their confidence in the Indian economy and the stock market.
The economy also seems to be in upbeat with macro indicators indicating that the things are getting better. The GST collections have touched Rs. 1.16 lakh crores in July 2021 which showed that the economy is gaining momentum and that Rs. 92849 collected in June 2021 was just one of events. CPI (Consumer Price Index) inflation has moderated to 5.59% as compared to 6.26% which gives room to RBI to keep the interest rates at the lower level. The RBI target base inflation strategy has kept the target for inflation at 6%.
RBI has kept the interest rates constant with no change in Repo rate at 4% and Reverse Repo Rate at 3.35%. The cost of capital continues to be low so that businesses can expand. From February 2019 there has been reduction of 250 basis point in Repo Rate. This resulted into banks lowering their cost of capital by 217 basis points. Retail inflation is at 6.26% which is slightly above the RBI comfort zone of 6%.
US Federal Reserve has maintained its accommodative stance and will continue to buy around $ 80 billion worth bonds on monthly basis till the economy gains more momentum. This means that cheap liquidity may continue to flow into the emerging markets for quite some time. The interest rates globally are very low, and all the Central banks have adopted accommodative stance since the world economy is not completely out of woods.
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