The liquidity push

Higher valuations could increase volatility in the new Samvat

The markets have posted double-digit gains in Samvat 2076 with the indices touching new peaks, even though economic activities have taken a big hit. This might seem paradoxical, with many market observers saying financial markets are forward-looking mechanisms and investors are usually optimistic in their projections. But quite a few of them are finding it hard to find a rationale for a disconnect of this magnitude. The fact is that the economy will contract substantially and inflation is up. In a broader perspective, the global economy is also not doing well. The increase in the number of Covid-19 cases in