The RBI's financial stability report has on Wednesday highlighted the disconnect between the real economy and equity market yet again. The central bank observed that Indian equities were trading at rich valuations, with several metrics such as price to earnings multiples, price to book ratio, market cap to GDP and the cyclically adjusted P/E ratio, or Shiller P/E, at above historical averages. For instance, as on December 13, the one-year forward P/E ratio for India was 35.1 per cent, above its 10-year average, and one of the highest in the world.
The market believes there will soon be another offer to buy the bonds.
India plans to launch trading of government bond futures within the next two months as part of efforts to deepen its financial markets, according to several sources involved in the discussions with the central bank.
Central banking is a science, not an art, Tamal Bandyopadhyay tells RBI Governor Shaktikanta Das.
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