Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Markets will remain closed on May 13, 2021 on account of Id-Ul-Fitr (Ramzan Id).

These balance sheets are worth a look
Tue, 19 Oct Pre-Open

Central bankers have never had it easy. But the last three years have been particularly taxing. Coming in and moving out of economic stimuli, managing inflation and reviving growth. Each one of them has had its plate full. The latest reports on currency wars between economies have once again put them in the spotlight. It would thus be appropriate to evaluate how these entities have managed their operations in the past.

The central banks carry out the task of ensuring that their currencies do not hurt trades. At times even at the cost of economic stability. The central bank of China being a case in point. The central banks of developed economies in particular deserve kudos for doing all that it takes to pull the economies out of recession. The results are for all to see.

As seen in the adjacent chart, the balance sheets of the central banks in developed economies have seen a very rapid expansion in recent past. Until October 2008 most of the additional liquidity was balanced through asset sales. However, thereafter the liquidity seems to have been pumped in thoughtlessly. In case of the Fed and the ECB, the desire to aid economic revival has induced the central banks to nearly double balance sheet sizes. ECB, however, was a little quick to mend its ways after the sovereign default risks. But the Fed is yet to realize its mistake.

Source: RBI

Back here in India, we have had more than a sensible central bank. The economic slowdown in India was relatively less malignant. Being less export dependant, impact of global economic woes was felt only in selective cases. Banks' financials were far more stable and did not require government bailouts. Strict regulation of currency movements helped prevent unforeseen leverage risks. And to top it all, negligible presence of risky securities along with prohibitive provisioning kept the risks at bay.

The result is that the RBI's balance sheet expanded not more than 40% from the base of August 2007 any time in last 36 months. On the contrary the central bank sucked up significant liquidity in recent months. In its effort to protect growth, the central bank has not taken unmindful decisions. And even this time, when exporters are looking for the central bank to bail them out of the currency trouble, the RBI is unwilling to relent in a hurry.

The balance sheets of central banks have not been considered as key indicators of economic prospects in the past. Probably it is time that they are taken more seriously.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

What else is happening in the markets today? Dig in...

Equitymaster requests your view! Post a comment on "These balance sheets are worth a look". Click here!


Stock Market Updates

Sensex Trades Over 300 Points Lower, Dow Futures Down by 128 Points (Today's Market)

May 12, 2021 12:30 pm

BSE Sensex is trading down by 328 points, while the NSE Nifty is trading down by 89 points.

Sensex Dips 300 Points, Nifty Falls Below 14,800; Godrej Consumer Zooms 10% (Today's Market)

May 12, 2021 09:30 am

Indian share markets open lower. The BSE Sensex opened down by 325 points, while the Nifty is trading lower by 84 points.

SGX Nifty Trades Flat, Interglobe Aviation QIP, Rising Premium for Non-Life Insurers, and Buzzing Stocks Today (Today's Market)

May 12, 2021 Pre-Open

Top cues to track in today's stock market session.

View More Indian Share Market News

Most Popular

The Next Smallcap Winners(Profit Hunter)

Apr 30, 2021

Price is the only due diligence one might require to buy this business.

Time to Buy Smallcaps?(Fast Profits Daily)

Apr 30, 2021

In this video, I'll show you why I favour smallcaps over the Nifty.

Are the Stock Markets Deaf to Covid Agony?(Profit Hunter)

May 6, 2021

Why are markets discounting the economic impact of Covid?

My Secret to Find Breakthrough Stocks(Fast Profits Daily)

May 7, 2021

I've used this trading technique for many years with great success. I'm sharing it with you today.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


May 12, 2021 (Close)