Puzzled why stock market is buoyant amidst slowdown: Arvind Subramanian

Expressing his confusion over a buoyant stock market amidst economic slowdown, renowned economist and former chief economic advisor (CEA) for government, Arvind Subramanian called for research in the area.

Subramanian was speaking at the inauguration of the NSE Centre for Behavioural Science in Finance, Economics and Marketing, being set up jointly by Indian Institute of Management, Ahmedabad (IIM-A), NSE and NSE IPFT.

"I hope the first behavioural economics project for the Centre is going to be to explain to me why as the economy has been going down, the stock market has been going up. If you can crack this puzzle for me in the first project, I will fly down all the way from the US to understand this puzzle. Through its behavioural economic research, the centre should shed light on economic policy questions that policymakers are asking," said Subramanian.

"I hope the domain of this Centre for Behavioural Sciences will not just restrict to economics, finance and marketing (but others) because this year's Nobel winners for economics have won it for behavioural economics where in part they bring to light unusual things about how humans respond to economics in certain conditions," he added. 

One of the first of its kind in a management institution in India, the Centre is going to conduct experiments in how different aspects of behavioural science impacts processes and outcomes in markets. 

According to IIM-A Director Errol D'Souza and marketing & international business faculty member Arvind Sahay, the objective of the Centre is to undertake knowledge creation in a range of topics related to business issues in financial markets and financial services that would be insightful to help decision making for policymakers, individual retail investors, fund managers, traders, analysts, wealth advisors, other managers and leaders. 

In the process the Centre would build high-quality research, analytics, and insightful knowledge on a range of topics related to business issues in the Indian financial markets and financial services across different stakeholders.

Commenting in an official communique, Vikram Limaye, MD & CEO, NSE said, "Societal and behavioural aspects tend to play a pivotal role in shaping savings and investment habits of the population. Insights gleamed from such research could throw new light on our understanding and help shape policies that could spread the benefits of capital markets to a wider section of the population."