The US jobs data gave the US market a much-needed reprieve. The markets showed their relief swiftly. But the problems aren’t going anywhere, and it is certainly not going to end anytime soon. The markets definitely know this only too well. Yet, the fear of rates rising are now real and anything that will remove those fears is a welcome thing. Such is the swing in the inflation expectations over the past few months.

From expecting three reductions through rate cuts to fearing a surprise hike in interest rates, we seem to have come a very long way. Our domestic markets are still showing tremendous confidence. The indices are testing new highs every week and selling off only to build up again. Domestic investment flows are strong and FII selling gets routinely absorbed in due course. IPOs are getting extremely strong traction and domestic investor confidence in equity as an asset class is at an all-time-high. There is hardly any sign of investor fatigue and most market watchers who are wondering what can go wrong hardly see signs of anything going wrong. Such a picture-perfect market is what usually tends to surprise, shock and awe.

The coming weeks are likely to be driven by political and global sentiments. Earnings reports will also flow through May, and the market will readjust its expectations after every result, management commentary, and forward guidance. While experienced market watchers seem to be in a state of disquiet with equity valuations, the markets hardly seem to be bothered.

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