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ET Special Podcast (ET Online)

If the economy isn't looking good then why is the Sensex rallying?

02:36 Min | November 07, 2019, 6:10 PM IST
BSE Sensex scaled a fresh high, much on the back of some ease in the US-China tensions. Quick question? The Sensex is looking good but the economy isn't, what's going on? Tune in!
Script: Poorabi Gaekwad
Hosts: Deepshikha Rahi, Poorabi Gaekwad
Producer: Deepshikha Rahi

The BSE Sensex scaled a fresh high on Thursday, and the NSE Nifty closed above that psychologically important 12,000 mark

Much on the back of some ease in the tension between Donald Trump and China and the booster shot back home

Rs 25,000 crore...for a real estate sector in drip.

But Quick question? The Sensex is looking good but the economy isn't, what's going on?

Hello, I'm Deepshikha Rahi

And I'm Poorabi Gaekwad, this is our special podcast on the economic slump, and the market’s behaviour

Manufacturing is down...abysmally low, credit is shrinking, banks are squeezed but the bourses are defying all logic.

Yeah, the sentiments got a booster after Finance Minister Sitharaman announced an Alternative Investment Fund to help out the real estate sector.

The 25,000 cr rupees fund is set to help complete more than 1600 housing projects that were stalled.

Sitharaman also said she won't miss the bus next time on reforms, which meant things might change for the better.

And the government’s intervention is needed now more than most.

But isn’t it important to curb fiscal spending in these times?

I mean if you think about it, in 2012, the government didn’t, and it still reduced the fiscal deficit by 1%.

There were other policies put in place, too. Cutting repo rates, loan waivers, refinancing, it took a lot of work on the FinMin’s part for the economy to become healthy.

Even in 2002, a corporate tax cut was introduced.

So does that mean, its gonna work this time too?

Well, data does show that for 387 companies, the PAT growth, which is profit after tax growth, is 17%. But its going to take about two to three quarters for the economy to normalise, so its hard to say.

Because right now, this crunch that started in the shadow banking industry is now affecting everything.

Manufacturing is shrinking, our trade has slumped, and now so has tourism.

Delhi’s pollution is gravely affecting flights, and driving away tourists.

Which could not have happened at a worse possible time. This downward spiral will need a lot of work.

And something that boosts confidence.

Which stimulates the stock market.

While a 5% growth doesn’t look so bad when you’re in this stale world economy, its pretty bad for a country like India.

And experts believe that growth should rebound to normal levels by the first and second quarter of the next fiscal year.

We’ll have to wait and see what Sitharaman announces next, for more news, views and cues log on to economictimes.com
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