Q.3) The recent equity market exuberance in India is being termed as a bubble. Do you agree with this view? Give reasons in support of your argument. (10 Marks)

“Mentor’s Comments”

  • https://www.thehindu.com/opinion/op-ed/indias-equity-market-bubble-may-burst-soon/article35433609.ece
  • In the intro, mention historic heights touched by the equity markets across the world including India.
  • In the body, mention the fundamental macroeconomic indicators and exceptional growth noticed in the market indices. In the next part, mention the factors driving the boom in the equity markets such as liquidity glut, low interest rates, stimulus package etc. From these factors, you can mention that the current situation indicates the existence of a bubble in the equity markets.
  • Conclude by mentioning the need to take measures and prepare for the implications of corrections in the equity market in the near future.
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