Globally stock markets have turned around smartly from the August 5th sell off triggered by US recession fears and the unwinding of the yen carry trade. Latest data on US inflation and unemployment relief do not indicate an economy tipping into recession. On the other hand, the 2.9% annual inflation number and slightly softening labour markets set the stage for a Fed rate cut in September, which the market is pencilling in now. The sharp dip in CBOE VIX to around 15% indicates that the fears were overdone and stability is the near-term trend.In India we have the paradox of exuberant retail investors and cautious institutional investors. The former is not much concerned about the elevated valuations of the market while the latter are increasing their cash component on valuation concerns. Investors should give priority to valuations in their fresh investment. The broader market doesn’t have valuation comfort.