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Quote On Morning Market 17 July 2023 By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

Stock markets often surprise, both on the upside and downside. A month ago Nifty crossing 19500 appeared a tall task since the Fed continued to be hawkish, US bond yields were rising and the dollar was strong in the backdrop of a slowing global economy. But the scenario has changed with US consumer inflation declining more-than-expected to 3% giving hopes that the Fed is near the end of the rate hiking cycle. Consequently, the US 10-year bond yield has sharply dipped from 5.1%to 4.7% and the Dollar Index has crashed by nearly 4% from 103.57 to 99.9. This is positive for emerging markets like India, which are likely to witness more capital flows. In July through 14th FPIs have invested Rs 30660 crores in India inclusive of bulk deals and investment through primary market. This reflects the increasing FPI confidence in the Indian economy and markets.

Investors should remember the fact that from the short term perspective valuations are stretched. But a lesson from market history is that liquidity surge can keep the valuations elevated for an extended period of time.

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