Stock valuations

With reference to the report ‘In a first, BSE M-cap tops $5t…’, while the development should be cause for celebration, experts are being unduly pessimistic.

These fail to appreciate several factors. Why is a PE ratio of 20 reasonable, and not 10 or 40? Just because 104 companies (out of several thousands) are trading at forward PE of 50, does not make entire market valuation ‘unsustainable’. FMCG companies and MNCs have been trading at such high PE for decades.

The disruption that is happening in sectors such as defense manufacturing (with huge export opportunities) and railways can benefit the economy. These combined with macro-economic and political stability instill much confidence.

V Vijaykumar

Pune

This refers to your editorial ‘Liquidity dilemmas’ (May 22). The banks’ liquidity crunch is largely their own creation. The crux of the matter lies in banks’ failure to pass on the full benefits of RBI’s repo rate cuts to depositors.

One of the key reasons behind commercial banks’ net profit surpassing ₹3 trillion in FY24 is their reliance on maintaining low deposit rates to exploit high NIM (Net Interest Margin).

Instead of adjusting deposit rates according to market dynamics, banks leaned on RBI to lower rates. Despite a surge in credit demand, banks refrained from increasing deposit rates.

So to ease banks’ liquidity crunch, RBI must ensure swift transmission of rate cuts to depositors.

Srinivasan Velamur

Chennai

Job creation

It is no doubt heartening to note that in FY24, 1.44 crore people were added to the EPFO payroll.

But given the number of people seeking jobs, this number (addition to EPFO) is far from satisfactory. That Uttar Pradesh and Uttarakhand have registered highest growth in the creation of formal jobs in FY24 is, of course, laudable.

That said, it is imperative that people try for such jobs that they are passionate about, or they should be creative enough to be job-givers.

After all, “Nothing great was ever achieved without enthusiasm,” to quote Emerson.

S Ramakrishnasayee

Chennai

Poll din

With reference to ‘It’s Kejriwal vs Amit Shah (May 22), the election campaign is getting really nasty with politicians focussing on irrelevant issues. Of course, the present electoral battle is very critical in country’s political history which has seen the Congress ruling the centre for decades after Indian Independence, with the BJP now being in power for a decade.

Politicians should desist from making unnecessary comments that end up vitiating the political atmosphere.

Katuru Durga Prasad Rao

Hyderabad