Does the RBI have control of our financial markets?

"Rallying for the second straight session, the 30-share Sensex jumped 593.31 points or 1.08% to its new all-time high of 55437.29. It touched an intra-day record of 55,487.79," Hindustan Times (HT). "Similarly, the broader NSE Nifty breached the 16,500 level advancing 164.70 points or 1.01% to its fresh closing peak of 16,529.10. It surged to a record of 16,543.60 during the day." By 1 August, equity investors had added Rs 31 trillion to their wealth in the first 4 months of the current financial year, CNBCTV18. "Retail investors and mutual funds are driving the ongoing bull rally, analysts said," The Indian Express (TIE). "Retail investors are buying stocks without any serious consideration for value. Now, we don't know when and how this rally will end. But we know it will end....and when it does, the new retail investors who have flocked to the market recently will be hit hard," said VK Vijayakumar. A Demat, or dematerialised account, is used to hold, buy and sell shares electronically, Angel Broking. Physical shares have been dematerialised to electronic form and are held in depositories. Brokerages have added an average of 1.3 million new demat accounts every month since April last year, taking the total number of retail investors to 69.7 as of May of this year, outlookindia.com. "India's largest mutual fund asset manager, SBI Mutual Fund, has waved the red flag on the country's stock market," Economic Times (ET). Fund manager, Dinesh Balachandran said, "Primary market activity is flashing warning signs. Such level of activity is normally associated with euphoria (in the market)." And "the internet sentiment index tracked by the mutual fund is also flashing warnings of extreme excitement among retail investors". This is due to global central banks, wrote Ajay Bodke. "TINA or there is no alternative to stocks with bond yields being so low. This is in no small measure due to 'financial repression towards savers' unleashed by global central banks through injection of tens of trillions of dollars of bond-buying programs (Quantitative Easing) that has led to 'manipulation of interest rates' fueling unprecedented speculative fervour in financial risk-assets like equities. FOMO or fear of missing out on another rise in stocks. And BTD, or buy the dip as a firm belief has taken hold that the torrent of monetary and fiscal deluge inundating the financial markets will continue unabated despite clear signs of build-up of debilitating inflationary pressures." But, global central banks do not have direct influence on the Indian economy, the Reserve Bank of India (RBI) has total control on money supply and interest rates in India. "Indian retail inflation eased in July after holding above 6% for two months in a row," as "Consumer prices rose 5.59% in July from the same month last year, lower than June's 6.26% annual inflation rate," ET. Despite the high inflation rate, the RBI "kept the repo rate unchanged for the seventh time in a row at 4 percent and maintained its 'accommodative stance', which means a bias towards lowering rates further, indiatoday.in, even while it raised its prediction for the consumer price index (CPI) inflation to 5.7% in this financial year from 5.1% that it had predicted earlier, CNBCTV18. While average CPI inflation was below 2% in the US, in 2020, usinflationcalculator, and was 0.5% in the European Union in 2020, World Bank, it was 6.9% in July last year in India, up from 6.2% in June 2020, Times of India (TOI). Since inflation compounds year-on-year, prices in India are soaring far above the rest of the world. Not content with keeping interest rates below the level of retail inflation, thereby punishing savers, the RBI is aping other central banks by resorting to quantitative easing, cutely named G-SAP or government securities acquisition program. On top of all this, the RBI is buying dollars from the market to keep the rupee from appreciating, so that our foreign exchange reserves have reached a record $621.464 billion, Business Standard. Excessive supply of rupees should make the currency weaker but it is appreciating because of foreign investments of Rs 511.21 billion in our stock markets in 2021, moneycontrol. The RBI cannot raise rates without collapsing the stock markets and causing bankruptcy for millions of first time investors. It has handed over control of our financial markets to foreign investors. We wait like sacrificial lambs.