Fear dominates hopes
In past 50 days of lockdown, I had a chance of interacting with numerous professionals, investors and businesspersons. The general environment is that of anxiety, fear and pessimism. The promise of a meaningful economic stimulus by the prime minister seems to have rekindled some hopes. Though greed usually accompanies hopes, as of this morning, the fear still continues to be the dominating factor in influencing the investment decisions. In my view, the following three are the primary sources of rising hopes: (a) The prospects of total collapse in economic growth and consequent high stress in the financial system is prompting RBI for an aggressive monetary easing. Easing inflation and government’s resolve to bring back the economy on growth path is also helping the sentiments. (b) There is abundant liquidity in the financial system. As of 6 May 2020, banks had deposited over Rs8.6trn in RBI's reverse repo window @3.75%. The banks have be...