10-year US treasury yields have shot up beyond 1.7%, jumping from their lows of 0.5% in the middle of 2020.
With bears taking control of Dalal Street, investors have been left poorer by Rs 11.85 lakh crore in the last six trading sessions. The market capitalization of all BSE listed companies stood at Rs 209.26 on March 10, since then the benchmark index has been in a free-fall and hence the market capitalization has plummeted to Rs 197.40 lakh crore on Friday morning. Global markets have been in a tizzy over the last few days with bond yields rising to their highest since the pandemic began.
Sensex had closed at 51,279 points on March 10, after having reached an intra-day high of 51,430. Down from those levels, the index has tanked 4.7% to now trade at 49,000. On the other hand, Nifty has slipped from 15,100 to now sit below 14,500 on Friday. Marquee names have mirrored the fall with Reliance Industries falling 8% during the period, HDFC down 4%, HDFC Bank 5%, and Axis Bank down 5%.
“Market dynamics have become highly complex with an uncertain cocktail of positive & negative factors,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Although Vijayakumar sees positives in the smart rebound in economic activity, sharp decline in crude, reaffirmation of accommodative monetary stance by the Fed, and resumption of FII buying, there are negatives as well. “The second wave of Covid, particularly in the economically crucial state of Maharashtra, the rise in US bond yield above 1.7% and sustained DII selling are negatives,” he added.
10-year US treasury yields have shot up beyond 1.7%, jumping from their lows of 0.5% in the middle of 2020. Although the US Fed as done it bit in calming the nerves of traders, yields have not consolidated. “The market direction in the short-term will be decided by either the positive or negative factors gaining traction, going forward. Investors will have to wait & watch,” Vijayakumar said.
On the technical side, Nifty has broken 14,700 this week, which was supposed to a crucial support level for the index. Now 14,400 is strong support for Nifty. “What needs to be seen is if we respect this level and bounce back. If we crack these levels, we should drop to 14000. On the upside, the resistance level is at 15100 and until we do not get past that, the markets will remain bearish and any up move is an opportunity to go short,” said Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments.