Financial Risk Management
India's Stock Market Bubble 2021: Signs and Causes
Article Details
| Pub. Date | : June, 2021 |
|---|---|
| Product Name | : The IUP Journal of Financial Risk Management |
| Product Type | : Article |
| Product Code | : IJFRM10621 |
| Author Name | : Tanushree Gupta* and Avichal Sharma |
| Availability | : YES |
| Subject/Domain | : Finance Management |
| Download Format | : PDF Format |
| No. of Pages | : 11 |
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Abstract
This paper analyzes and forecasts the contrasting conditions of real economy and stock market amid pandemic. Stock market is a place where public dealing takes place for issuing, buying, and selling of stocks in the form of facilitation of the transfer of funds from investors to firms. The main aim of the stock market is to assist firms in raising funds. In this paper, the stock market bubble of 2021 and various pull-push factors behind swelling of the stock market are vividly discussed. As it is known, bubble brings rapid rise in the prices of assets and is usually cyclical in nature. Recently, RBI has shown concern over stock market bubble in its financial report. The paper discusses India's stock market bubble 2021 and provides the reasons for the same: decentralization of firms from China, increase in the rate of vaccination, India's monetary and fiscal policy during the pandemic along with the welfare assistance provided to the public.
Introduction
The stock market is a public market for issuing, buying, and selling stocks that trade over-the-counter or on a stock exchange. Stocks, sometimes known as equities, represent fractional ownership in a corporation, and the stock market is a marketplace where investors can purchase and sell such investible assets. Because it allows businesses to swiftly obtain capital from the general public, a well-functioning stock market is considered as important for economic success. A stock market's primary goal is to allow the transfer of funds (capital) from savers (investors) to borrowers (companies). When a company needs funds for growth and expansion, it can either borrow money from investors (debentures) or borrow money from banks (bank loans), or it can issue equity shares to shareholders (O'Shea and Davis, 2021). The stock market is where companies offer equity shares to shareholders. As a result, the major objective of a stock market is to assist businesses in raising funds for expansion and growth. A stock market's secondary aim is to enable private investors (savers) to participate in the borrowing corporations' development and earnings. While investing in stock market entails some risk, with the correct investment strategy it can be done safely and with little danger of long-term losses. Day trading, which is buying and selling stocks quickly depending on market fluctuations, is exceedingly dangerous. Long-term investing in the stock market, on the other hand, has proven to be an effective strategy to accumulate wealth. Before adjusting
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