Fall in markets a reflection of global factors, says CEA KV Subramanian
"Stock markets often react with greed and fear. Currently, there is fear because of coronavirus. I expect that sentiment to subside in the next few weeks," he said.
March 13, 2020 / 02:16 PM IST
The carnage in stock markets is primarily a reflection of global factors and the prevailing sentiment due to the coronavirus outbreak, Chief Economic Adviser (CEA) KV Subramanian said on March 13.
"Stock markets often react with greed and fear. Currently, there is fear because of coronavirus. I expect that sentiment to subside in the next few weeks," the CEA said.
On March 12, D-Street witnessed a historic crash as Sensex registered its biggest one-day fall in absolute terms.
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He said that the current developments in the market are all related to global factors.
"If we look at the number of countries that have had a huge decline in stock prices from Jan 31 till Mar 12, all these countries - Russia, Brazil, France, Germany, Argentina,UK Argentina UK US and Japan - have witnessed more than 20 percent decline in their stock prices. India is actually below them," he said.
Subramanian said that India has about half a trillion dollars reserve.
"There's adequate foreign reserves. If you look at current account deficit (CAD).. and given the decline in oil prices, we can expect the CAD to be significantly lower," Subramanian said.
He said that tourism, hotels, restaurants and movie exhibition business will likely bear the brunt of the coronavirus outbreak.