Disparity between rallying global stocks and deteriorating data is the most pronounced in India

“Any market activity without supporting fundamentals will not sustain,” said C. J. George, chief executive officer at Geojit Financial Services Ltd.

Just months into the new fiscal year, the fiscal deficit is close to touching its annual target.Adding salt to injury is India’s bad loan ratio, which is expected to swell to the highest level in more than two decades in 2021 following the world’s strictest lockdown measures, the central bank said last month.

Economic activity remains in a limbo even after the gradual lifting of curbs on businesses and movement of people. While most of the large Asian economies, except China, are set to contract this year, India is set to shrink the most in that group, data compiled by Bloomberg show.Exports and business activity did improve in June, signaling the worst may have passed, though the pace of the recovery has been slow. The latest manufacturing purchasing managers’ index showed activity remained in contraction territory in July and was worse than June, according to IHS Markit.

Meanwhile, the S&P BSE Sensex is up 45% from its March 23 low, thanks to the rising interest of first-time investors and three straight months of purchases by foreigners. The rebound is ranked eighth best among major global equity indexes for the period.

The tougher it gets for India’s economy, the more investors expect from the RBI. That may be the reason why the Sensex keeps rising even as the virus figures reach alarming levels.

Anyway,investors will be watching for commentary on the economic outlook from the RBI tomarrow ( 6th August, when policy makers are expected to cut the key rate by 25 basis points.