The Hindu

Correction ahead for stock market, warns Das

RBI chief flags disconnect to economy

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Sounding a note of caution, RBI Governor Shaktikant­a Das on Friday 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,” Mr. Das said in an interview to a private 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.

Talking about the economic outlook, Mr. Das said the RBI has projected that the Gross Domestic Product (GDP) will be in the negative territory this fiscal.

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