Theory says that stock market helps in understanding the state of economy and is the leading indicator of what’s going on in that specific country or the world. But since a month after making the lows, not just Indian markets but US markets are almost daily shooting 1-2% up on “hopes” of cure from COVID - 19 pandemic. Meanwhile, businesses are shut and some are even shutting down, employees are being layoff, salaries are being delayed but all these factors are neglected on “hope” of improvement which will not take less than a year.
What do you think, is this move a strange move or an expected move ?
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“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
― Benjamin Graham
It means that in short term market numbers reflect the sentiments. The sentiments may be irrational sometimes and so is the behaviour of the market in short runs. However, in longer run (may be few years down the line or 10 years, say) , it will always show you a more rational and concrete number of the underlying.
Actually, it is the divergence between voting machine number and weighing machine number that generates investment (and dis-investment) opportunities. Market-value does not remain equal to the intrinsic value of the underlying. That is where we ValuePikrs find opportunities 
. Logic is simple - BUY when voting-machine number is less than weighing machine.
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Stock market always works on assumptions and that is USP of stock market. Everyone has their own assumptions (based on different level of analysis) of what is going to happen in future.
So it does not always tells you current state of economy but it tells you future state of economy. But remember market is never right, it is sometime undervalued (when fear kicks in) and sometime overvalued (when greed comes out) and that makes it interesting.
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It is indeed interesting that people didn’t assumed that since businesses are stopped sales will be down so Quarterly results will be down. I feel lucky to understand these patterns early in my investment journey. A good lesson to learn is theory and practical are way different. Meanwhile US markets have waken up to the real scenario.
There you made your point. So it seems when you are in stock markets, economy issues is priced in later rather sentiments comes into picture first.
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