INDIAN TEER RESEARCHERS have identified a potential cause of the sudden surge in Indian stocks and the subsequent crash in Asian currencies in the past year.
The stock market in India is currently trading at around 17 per cent of its pre-crisis peak, according to a report by the Bombay Stock Exchange.
It is the highest since the 2008 financial crisis and has not risen in 12 years.
The report says the problem is being addressed by the central bank.
But some investors are still taking the stock market for granted.
“In the next few days, we’ll see a sharp rise in India’s market capitalisation,” said an institutional investor in Mumbai, who wished to remain anonymous.
“For a while, the market looked like it was going to stay there for a while,” the investor said.
“But there is an oversupply of shares.
It will continue to be a very tight squeeze, and I don’t see the market stabilising.”
Investors are now betting on the stock markets to become more stable in the coming weeks.
“There are so many investors out there, but they’re not buying into the fundamentals of the market,” the institutional investor said, noting that the Indian stock market is in the midst of a correction and the country is in recession.
The market is not doing well.
It’s not doing very well, and that’s a problem for investors, he said.
“We need to see a strong correction.
The problem is the fundamentals.
I would not be surprised if the market is trading at 17 per [per cent], but the fundamentals are not there.”
This is a big problem.
Investors should not buy into the stock prices, he added.
The Indian government has tried to mitigate the impact of the rupee’s fall by easing monetary policy and cutting interest rates.
But investors are taking the rupees for granted, saying it is too cheap and has no fundamentals.
The government has cut the interest rate from 6.5 per cent to 5.75 per cent and is also tightening liquidity controls.
The markets in the country are still heavily influenced by a rally in crude oil and oil-related shares that began in January last year.
A lot of people are buying these stocks, but there is a lot of room for the market to fall further.
When the ruis were at 17.1 per cent, the benchmark S&P 500 was trading at just over 18 per cent.
Investors in India also hold many of the country’s banks and are worried about a slowdown in lending as a result of the recent slowdown in the economy.
India’s economy is still growing, but it is still suffering from a sharp slowdown in its economic growth.
The rupee fell by around 10 per cent against the dollar in the first week of the new year and it is currently hovering around 17.5 to 19 per cent as of late February.
The ruis have fallen by about 7 per cent this year against the US dollar.