By Vijay Bhushan
The Reserve Bank of India (RBI) has sounded caution that there is a bubble building up in the stock market, as the gap between real economic growth and stretched asset prices are widening, but the observation may be far fetched and not reflective of the realities of the market in current times. While the RBI may have access to far more information and data on this, and financial markets have witnessed sudden and sharp crashes in the last 40 years at least, this is not the situation today.
A stock market bubble arises when greed far exceeds fear. Today, while people are entering the market, there are still a large number who are fearful. The fear engulfing their minds is what might happen if the country entered the third wave of the COVID19 pandemic, which is expected to be deadlier than the second wave….