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India sees simultaneous stock rally and financial turmoil

While Sensex index has hit record highs, bank downgrades signal trouble ahead

On June 3, the benchmark BSE Sensex closed above 40,000 for the first time.   © Reuters

TOKYO -- India is witnessing the unconventional combination of a historic stock rally and a mini-financial crisis.

On June 3, the benchmark BSE Sensex stock index closed above 40,000 for the first time. The rally is stimulating the economy, with higher stock prices increasing the financial assets of the affluent, prompting them to spend more and in turn pushing share prices yet higher.

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