October 31, 2017

Why stock market and economy are not always in sync

A recent analysis by brokerage firm Credit Suisse showed that the relationship between the economy and markets is tenuous at best.

Markets and the economy have different structures, meaning there exists a large informal economy, large parts of the formal economy may not be listed, and a large part of the market is driven by global factors or growing penetration and share, it said.

India’s quarterly growth saw a sharp deterioration from 7% in the third quarter of fiscal year 2017 to a three-year low of 5.7% in the first quarter of fiscal year 2018, hurt by demonetisation and implementation of the Goods and Services Tax (GST). However, the market’s continued ascent does not reflect the pain caused by either of these events to the large informal sector, which is a key contributor to the GDP and generates a large number of jobs.

Read more at http://www.livemint.com/Money/LQu0t6tUAPcNQj3ks3HvrN/Why-stock-market-and-economy-are-not-always-in-sync.html

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