RBI warns of stock market bubble: Should investors be worried?

The Reserve Bank of India warned about a possible stock market bubble. In its FY21 annual report, the central bank suggested the price boom seen in some financial assets pose the risk of a bubble. Should investors be worried? Here is all you need to know.

The Reserve Bank of India (RBI) recently warned about a possible stock market bubble in its annual report for FY21. The central bank’s comment comes on the back of domestic stock markets touching record highs even as the country’s economy continues to face disruption due to the second wave of the Covid-19 pandemic. Anyone who has followed the domestic stock market over the past few months will know that the bourses have been performing impressively, ignoring economic disruptions during the second wave. Though a brief period of uncertainty was seen during the initial period of the second wave, benchmark indices S&P BSE Sensex and NSE Nifty50 have again started surging. On Friday, Nifty50 ended on a record high, while Sensex is inching ever closer to the 52,000-mark.