“There’s a lot liquidity within the system, within the world financial system, that is why the inventory market could be very buoyant and it’s positively disconnected with the true financial system,” Das mentioned.
“There will certainly be a correction however we won’t say when.”
The blue-chip NSE Nifty 50 index and the S&P BSE sensex have gained 37.1% and 35.2% respectively, as of their final shut, on this monetary 12 months, beginning in April.
This month, the financial coverage committee held rates of interest regular on account of rising inflation however Das reiterated that the central financial institution had sufficient coverage house and would use it as wanted.
The RBI has already lowered the repo price by a complete of 115 bps since February, on high of 135 bps in an easing cycle final 12 months.
“We now have coverage house. We now have to maintain the arsenal dry and we’ve got to make use of that judiciously sooner or later,” he mentioned.
In response to minutes of the newest financial coverage committee assembly, launched on Thursday, it recommended that the financial institution sees little room for price cuts on this atmosphere.
Retail inflation in June rose to six.09%, increased than the RBI’s 2%-6% mandated goal vary, forcing it to maintain charges regular. A breach of the band for 3 straight quarters requires the committee to supply an evidence to the federal government.
At a time when the financial system is severely hamstrung by the novel coronavirus pandemic, the RBI expects extreme contraction in gross home product within the first half of this monetary 12 months.
“The financial system will enhance within the second half however the annual development quantity will stay in damaging territory,” Das mentioned, with out giving a selected forecast due to the unsure atmosphere.