DECODED: Don't fear, rally continues! Market Guru Anil Singhvi explains the impact of strong liquidity on the US markets

Zee Business Managing Editor and renowned Market Guru Anil Singhvi said that the strong inflation data number from US markets is only because of the liquidity strength in the US markets. He said that the inflation rate stood at 5% vs expectations of 4.75%, which is at a 13 year high. Singhvi said that the inflation rate above 4%, is at much higher levels in the US. He said despite such a high inflation rate, the bond yields are falling.

Singhvi said that despite all the analysis, the market is showing strength because of strong liquidity flow in the markets. The US Markets are completely ignoring the inflation data because of liquidity in the market.

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Singhvi said that the US Markets and the US economists believe that the rise in inflation is temporary and it will come down gradually. However, Singhvi said that it is difficult to explain why the bond yield dropped yesterday. He said that it is not necessary that markets will move every time according to the analysis, sometimes markets make their own moves which are difficult to digest.

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Singhvi said that demand-supply of the shares and liquidity will eventually decide the move for the markets. Singhvi said that the US markets are not much worried about the inflation data. He said that higher inflation data indicates growth in the US Economy which is good news for the US markets.

Singhvi said that the US economy is not listed; US companies are listed on the stock market. Growth in the economy will reflect in the share prices and markets want the economy to remain strong. If the economy is strong then the markets will stay strong and share prices will keep soaring due to the growth. Increase in the earnings of companies and attractive valuations will ensure some buying in companies.

Singhvi said the US markets were extremely interesting yesterday. He said that key learning from yesterday’s volatility in the US market indicates that despite the data heavy news, the market remained strong continuing the momentum.