Uday Kotak, the managing director and executive vice chairperson of Kotak Mahindra Bank, on Sunday said the surge in stock markets raises concerns about a “bubble”, The Indian Express reported.

A stock market “bubble” occurs when investors drive the price of a stock much higher than its actual worth, increasing the possibility of a market crash.

A lot of domestic savings were flowing to “a few hundred stocks” of firms whose governance standards were doubtful, Kotak said. “While we are in the right direction, I always worry about excesses,” he told The Indian Express. “Massive amounts of savings are moving to the financial savings space. Money flows into mutual funds, unit-linked schemes of insurance companies and directly into the equity markets. It enters through a broad funnel and goes into a narrow pipe.”

The BSE Sensex rose by a record 7,430 points, or 27.90%, in 2017, and market capitalisation increased by Rs 151.73 lakh crore. The surge continued during the first 12 days of 2018, with the market rising nearly 500 points.

Kotak headed a committee formed by India’s market regulator, the Securities and Exchange Board of India, which submitted a report in 2017 on changes in corporate governance rules for listed firms. “People think nothing can go wrong [in the stock market],” he said. “I would increase my level of alert from the policy point of view and dramatically improve the level of governance and transparency.”

He also criticised the high level of foreign investment in top private sector banks, such as HDFC.