1
$\begingroup$

While economy in india is experiencing a slowdown, the stock markets are having record highs. can someone explain this dichotomy in simple language ?

$\endgroup$
  • 1
    $\begingroup$ Irrational exhuberence? Though, one could expect this in boom times. $\endgroup$ – london Jan 4 at 14:33
1
$\begingroup$

Two possible explanations I have:

  1. The stock market capitalization to GDP in India, although high, is at around 70–80 percent, compared to 100+ percent for countries with more developed capital market. This means that any gains or losses in the stock market would have an average 70% impact on the economy.

  2. Being one of the fastest growing markets in the world (due to its population size, urbanization, and the rise of middle income families), the market has huge potential in the years to come, and the stock market takes that into account.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.