The huge disconnect

Gloomy economic narrative does not justify stock market highs

The disjunction between the economic narrative and stock markets is getting wider by the day. After falling significantly in the initial days of the Covid-19 pandemic, the markets have rebounded sharply even in the face of a strong consensus that the economy will contract. India has been experiencing this paradox with several other markets. In January, when the pandemic was just a blip on the horizon, the Nifty had hit an all-time high of 12,340 points. By late March, as India entered lockdown, the index had dropped about 40 per cent to 7,511. But in the next three months, it