The market has been consolidating for a while, however, all dips are being bought eventually. Foreign institutional investors have continued to pour money into India, providing massive support to the market rally.
“An important development yesterday was the US 10-year bond yield touching 1.29 per cent, the highest level since Feb 2020. The bond market is factoring in a rise in inflation in the coming months. The rise in yield reflects the market’s concern that President Biden’s proposed $1.9 trillion fiscal stimulus package on top of the massive monetary stimulus will lead to a spike in inflation,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“If the yields continue to rise, it can be negative for equity markets. It may be too early to take an investment call based on this. But, this space has to be watched. The texture of the market continues to be ‘Buy on Dips’ since FPI inflows continue to be strong.”
Factors driving markets
- US bond Yields rise: Benchmark ten-year US Treasury yields rose as far as 1.3330 per cent in Asia, the highest since February 2020, although they later eased back to 1.2989 per cent.
- The gap over two-year yields also opened to its widest in nearly three years, as traders figure that short-term monetary policy will stay accommodative, even as the world bounces back from the pandemic.
How bluechips are doing
After opening in the red, benchmark indices dipped further. At 9:49 am, BSE flagship Sensex was up 322 points or 0.62 per cent at 51,782. NSE benchmark Nifty followed and fell 82 points or 0.54 per cent to 15,231.
In the 50-share pack Nifty, Adani Ports was the biggest gainer, up 2.33 per cent. Hero Motocorps, HDFC Life Insurance, SBI, GAIL, NTPC, BPCL, Hindalco and ONGC were among other gainers.
Nestle India was the top loser in the pack, down 4.07 per cent. Kotak Mahindra Bank, TCS, HDFC, Asian Paints, Wipro, IndusInd Bank, Divi’s Labs, HDFC Bank and Sun Pharma were other losers in the pack.
Broader markets
Broader market indices traded with gains outperforming their headline peers in morning trade. Nifty Smallcap was up 0.13 per cent while Nifty Midcap added 0.32 per cent. The broadest index on NSE — Nifty 500 — was down 0.31 per cent.
Adani Total Gas, Varun Beverages, Dr Lal Pathlabs, HEG Infra, IDBI and Graphite India were among major gainers from the space while J Chemicals, Lemon Tree Hotels, Granules India, Coforge, Dalmia Bharat and Jindal Steel were under selling pressure.
Global markets
MSCI’s broadest index of Asia-Pacific shares outside Japan was stalled just shy of Tuesday’s record peak. Japan’s Nikkei fell 0.7 per cent and S&P 500 futures slipped 0.3 per cent after the index posted a small fall overnight.
Overnight on Wall Street, the Dow Jones was helped to a record closing high by gains from banks, which benefit from higher yields, while the S&P 500 fell 0.06 per cent and the Nasdaq dropped 0.3 per cent.
