“The period of simple cash, which was there from 2008 onwards, has resulted in excessive inflation in 2022 and 2023 and has resulted in a really costly inventory market, virtually reaching the highs earlier than the tech bubble burst in March 2000,” Nageswaran mentioned, talking on the press convention on the Financial Survey 2025-26.
Cautioning about present market dangers, he mentioned these are being amplified by the dominance of a handful of very giant firms and a shift in world monetary flows away from banks in the direction of comparatively much less regulated non-bank sources.
The feedback come at a time when world fairness markets, notably know-how shares, proceed to commerce at elevated valuations regardless of persistent geopolitical tensions and uneven financial restoration.
The Financial Survey flagged that focus danger has elevated meaningfully, with a small set of firms accounting for a disproportionate share of market cap and returns.
On the worldwide markets, it famous that synthetic intelligence-linked shares have pushed the majority of good points in main world indices since late 2022, elevating considerations about inflated valuations and vulnerability to sharp corrections.
Nageswaran additionally drew consideration to the sharp rally in valuable metals, suggesting it displays extra than simply short-term geopolitical uncertainty. “Gold isn’t solely responding to world uncertainty but additionally query marks arising out of the shop of worth of fiat currencies world wide,” he mentioned.The survey noticed that gold and silver touched lifetime highs throughout 2025, supported by a weaker US greenback, expectations of damaging actual rates of interest and heightened geopolitical and monetary dangers. On home exchanges, silver futures crossed Rs 4 lakh per kg, whereas gold scaled recent all-time highs, underscoring robust safe-haven demand.
The broader message of the survey is that extended uncertainty can have lasting results on monetary markets and the actual economic system. It highlighted analysis exhibiting that uncertainty usually leads traders and corporations to delay selections, elevating financing prices and slowing capital formation. Over time, this can lead to sharper market corrections and even monetary contagion throughout asset courses.
Towards this backdrop, the survey known as for India to strengthen its long-term capital markets and cut back the economic system’s dependence on bank-led financing. It prompt a coordinated push to diversify funding sources, together with steps to rationalise the tax remedy of debt devices, that are presently taxed at a person’s marginal earnings tax price.
In distinction, fairness investments profit from decrease capital good points tax charges, making a bias that hurts liquidity within the debt market.
The survey additionally beneficial measures corresponding to credit score enhancement amenities for lower-rated debtors and a evaluation of funding tips for long-term funds, arguing that these reforms may assist decrease the price of capital and assist infrastructure and climate-related financing.
