Prof. K.S. Madhava Rao: Every financial crisis has a bearing on the stock market; whatever be the reason. It could be political, sociological problems, or government upheavals… All of them point out the instability of the system. The stock market data relies heavily on the stability of the system. Whenever there is an instability, in whichever area, it could be for example, geopolitical reasons, it will have a cascading effect on the stock market; so that is the prime reason.

Prof. K.S. Madhava Rao: You should always look at the growth. All the stock markets are computed on the basis of a base period. If we look at the Indian stock market, the stock market data was started around 1960. So that becomes the base period. The base is usually taken as 100. Whereas the US stock market has a history of about 250 years. So 250 years back, the base was 100. And over the years, the base has moved up. So that is why we see that there is a difference. A qualitative and quantitative difference between the stock prices. It all depends on the base. This is why the association varies. They are quoted very high and the values are very huge because they are constructed over a base period which is much earlier to the base period of our Indian stock market; like the BSE or NSE.

Prof. K.S. Madhava Rao: The reason for it is the political instability. So in this case, if you look at the period after the NDA government came into power… Politically, this government is very stable. We are not talking about their performance. Politically, they have a very stable government which has actually contributed to the symmetry of the market hypothesis. If we look at the earlier years, during the Manmohan Singh government… The Congress, the UPA government 2 or the UPA government 1, they were very unstable governments. Because it was based on several parties. They didn’t have their majority on their own. So that has contributed to a lot of speculations in the market. Whenever there is a speculation, the volatility is very high.

Prof. K.S. Madhava Rao: I think it is very likely. The problem with most countries is they don’t learn from the mistakes of the other countries. For some reason they feel they are insulated just because they have different social values. “My country is different from all other countries”. This belief is very dangerous. Especially the Asian nations… We say, “Ours is a Savings economy. We don’t spend beyond the means of our pocket and therefore we are different.” Whatever is happening in Greece or Mexico may not be happening in India, but these economic crises… they don’t have barriers. They may happen any time. So it is very important to learn from the mistakes of the other countries also. It just doesn’t depend on your value system alone; it can happen any time, because there are so many players.If we look at our own country, Indian investment is slightly smaller than FDIs. So that means we are surrendering our freedom of movement of prices to them. So when they pull out money from the stock market, obviously that will cause panic among the investors. So that is what is happening.

Prof. K.S. Madhava Rao: You can’t really say. I think we are okay, unless there is a problem with the government. As long as this government is steady. I don’t envisage economic crisis in at least another 5 years’ time. By that time the next general election would have taken place.

Prof. K.S. Madhava Rao: There may be a recession. There are actually two things: A depression, which would be a crisis. The recession on the other hand, cannot be a crisis since we can learn lessons from it. With the government intervention, in the form of private and public partnership, it is possible to avert that situation.

Prof. K.S. Madhava Rao: Data Analytics is very important in the present day. I think the people who want to have a very good career, should also be very good at Data Analytics. So what is happening now is, you have to be very firmly grounded in your basic knowledge. I see most of the B-school products are well trained in management, but I still see a gap in their quantitative abilities. If you look at some of the banks, their R&D department has people who are sound in their analytical abilities; they are the ones who are making investment calls. Of course, they have all the traits that you learn from the B-school. But added to that, they are also very good in their basics, like mathematics, statistics, economics, or financial data analysis. All these subjects go hand-in-hand. So in a gist while abstract knowledge is very important, analytics and computing skills, supported by mathematical ability makes you indispensable to any organization, especially banking and financial services companies.