Divergence Between Stock Market Performance and Real Economy Trends

by Panchanan Das
 
India - Many economists believe that significant decrease in stock prices could be source of future recession, whereas large increase in stock prices may reflect the expectation towards future economic growth. However, there were controversy issues to doubt the stock market’s predictive ability such as the 1987 stock market crashed followed by world recession and the 1997 Asian financial crisis. Daily BSE Sensex movements can be followed live on Glarius Investments Intelligence Platform. www.glarius.com

While the Sensex, as of any other stock or share price index, is conventionally treated as an indicator of economic performance of an economy, it can only be the gross indicator of an economy like India both statistically as well as conceptually. This is because the movement in share prices is guided by the expectations about the future performance of companies listed on the stock exchange. Here we enter in the field of Markets Intelligence. Movements in share prices may indicate economic health, but it could not predict properly the performance of the real sector. Glarius (www.glarius.com) has tools to monitor performances of Indices worldwide. Performance, yields of the last 25 years. Also, we have a tool to predict future movements in Indices. GLARIUS PROGNOSIS TOOL. 

There is a divergence between stock market performance and real economy trends. The stock markets seem reasonably function well even if the real sector not performing so well. This is because the Sensex is a stock market index representing the movement in the share price of major companies listed in the Mumbai Stock Exchange.

Mr. Panchanan Das is an Economics Professor at University of Kolkata Kolkata, West Bengal, India