In a Bubble Already?
The Reserve Bank of India has warned the market about a possible bubble as it has continued to surge despite the 8% GDP contraction in FY21.
RBI has highlighted stretched asset prices and their widening gap with real economic recovery as a major global concern. It has further suggested that global policymakers will need to start thinking about curbing easy money flow at some point in time.
Currently, all the global central banks have adopted a friendly monetary policy to support growth. It has flushed the markets with high liquidity, resulting in inflated asset prices.
By warning about a bubble, the RBI suggests that the market has been too liberal in its future growth estimates. And a correction is likely to be in order if those expectations are not met.
Paytm IPO: India's Largest
Paytm is likely to come out with its IPO at the fag end of CY21. As per an estimate, the company is planning to raise around Rs 21,800 crore, making it India's largest IPO ever.
The board is likely to take a final decision on this matter soon. And as per the grapevine, Paytm could be aiming at a $25-$30 billion valuation.
Paytm is currently valued at ~$16 billion, which makes it India's most valued startup. The company has gained operational efficiency in recent years, with losses reduced to Rs 2,942 crore for FY20. It is also backed by SoftBank, Alibaba, and Berkshire Hathaway, which works in its favour.
Unemployment Inching Up
The lockdown impact is likely to show up on employment data of May, which are expected to be released soon. An estimate suggests that the unemployment rate could be over 10%, with around 1 crore jobs lost in May. The unemployment rate stood at 7.97% in April, with around 73.5 lakh people out of the job.
There are enough indications that the situation could further deteriorate in May with unemployment rising in both rural and urban areas. The urban unemployment rate stood at 12.7% on May 23, while the rural unemployment rate inched up to 9.7% compared to 7.1% on May 1.
Rising unemployment is a major worry. However, the situation is far better than what we witnessed last year. The unemployment rate had touched as high as 23.5% in April last year under the impact of strict lockdown across the nation.
