Economists are baffled by the disconnect between the poor state of the domestic economy and the stocks that are rallying incessantly.
Just last month, RBI Governor Shaktikanta Das said India’s stock market is not in sync with the real economy and said there might be a correction ahead.
But analysts say stock investors bet on future earnings.
The market has already looked beyond the ongoing ‘washout’ year and is looking forward to FY22 earnings.
Some projections say Nifty would go beyond 12,000 as soon as the market fully factors in FY22 earnings.
The market is taking shrinking June quarter GDP as a one-off factor, as it’s not India-centric but a global phenomenon.
People are not reading too much into the economic readings, as factors such as-
Strong foreign inflows, an appreciating rupee, weakening Dollar Index and retail participation in equities are all at play.
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