After correcting by around 6% in the last one month, the Sensex surged by more than 2% on Monday. The Nifty too inched up by a similar quantum. This rise in the Sensex was led by stocks from the banking and pharmaceutical sectors. Among them, ICICI Bank Ltd, the top gainer on the Sensex, was rewarded by the market for its stable September quarter (Q2) earnings. Broader markets also performed well.

However, there is a spoiler: Foreign portfolio investors sold a net 2,230 crore in the cash market on Monday. The market was propped up by domestic investors, according to NSE data. The factors that led to the sell-off haven’t gone away.

Considering the recent carnage, some bounce back was on the cards, analysts said, and investors may have used last week’s market fall to add beaten down quality stocks to their portfolios.

Monday’s rise in benchmark indices is no indication that the road ahead is smooth for equity investors.

As the chart above shows, consensus estimates for Nifty’s one-year forward earnings per share have been tumbling from the start of this fiscal and continue to decline. This means the much-needed earnings revival may not happen anytime soon—a key sentiment dampener. It signals a bumpy ride for the market.

While the September quarter earnings so far have been a mixed bag, companies across sectors are struggling with input cost inflation, signalling further pressure on operating margins.

There also is limited clarity on the Infrastructure Leasing & Financial Services Limited (IL&FS) debacle and the liquidity crisis faced by non-banking financial companies (NBFCs). The Reserve Bank of India’s move to infuse money in the system through open market operations has kept a lid on bond yields, aiding the market, but NBFCs can be party-poopers.

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On the macro front, worries with respect to crude oil prices and a weakening rupee aren’t completely out of the market’s way. As a result, challenges on current account deficit remain.

The 2019 Lok Sabha elections are also a significant risk and swing factor for the market. Some equity analysts are cautioning about nervous selling in the run-up to the polls, which could lead to deeper cuts.

Globally, apart from trade war concerns, a recovering US economy and elevated inflation could prompt the US Federal Reserve to tighten faster than expected. Private sector growth rebounded to a three-month high in the US, but companies continue to face intense cost pressures, according to global information provider IHS Markit’s latest Flash PMI report. Thus, there is little reason for the Fed to pause.

Rising interest rates coupled with a strong US dollar is certainly not a desirable combination for emerging market equities.

Meanwhile, the fear-gauge or NSE’s India volatility index is hovering around the 19 mark. In the wake of these concerns, there is no room for complacency, given that Indian equities may not have hit the bottom yet.