Riding high

High liquidity, low interest rates lead to stock market upswing

Global stock markets have made a stunning recovery in October, and Indian equities have moved up in tandem with other markets. The Sensex and the Nifty are now trading about 2.5 per cent below their respective January levels — while the former has regained the 40,000-mark, the latter is just a few percentage points below its all-time high. This is remarkable, given the turmoil triggered by the pandemic. This rally is partly due to a combination of high liquidity and low interest rates. Also, paradoxically, equity investment has been enhanced by a lack of real economic activity. Every central bank,