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Quote on Morning Market 02 December 2022 By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

A major market positive that has helped equity markets globally during the last several days has been the steady decline in the dollar index and US bond yields. This trend continues. The dollar index is now below 105 and the US 10- year bond yield is around 3.43 %. Another important data is the declining manufacturing activity in the US in November. This negative economic news is paradoxically positive news from the market perspective since it indicates that the US economy is responding to the monetary tightening by the Fed. So, US inflation is likely to decline further enabling the Fed to slow down rate increases and perhaps pause in Q1 of 2023. This is market positive. Back home, even though there is momentum in our markets, valuations are at elevated levels. Scope for further PE expansion is limited. Therefore, the market is likely to consolidate around the present levels.

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