Do you think the current equity market is in a 'bubble' state? How likely is for it to burst in the near future?
- PVS K Chowdhry
I really don't know. I will just give you the context of a possible 'Yes' and 'No'. The businesses had come to a standstill. They are certainly beginning to start gaining and we are slowly moving back to the old days. If we are able to achieve 80-90 per cent of the activity, then the market may not be in a bubble mode. So whether incentivised by this budget or any other reason, if we are able to overcome the crisis, then it is not a bubble.
Also, how expensive or cheap the stock of a company is entirely a function of earnings. So if the earnings go up again, then it is not a bubble. But if these businesses drag for two to three years and they are unable to make a comeback, then this is a bubble. So, I would say if you are pessimistic about the recovery, then it is a bubble and you should take your money out.
This article was originally published on February 17, 2021.
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