US yield shock, oil surge hammer equities; Nifty hits lowest since April 7
The BSE Sensex tumbled 1,248 points to close at 73,581, while the Nifty 50 shed 384 points to end at 23,063 on Thursday
A recent sell-off in equities across the globe was triggered by mounting global uncertainty and a notable increase in US bond yields. The BSE Sensex plummeted 1,248 points to 73,581, while the Nifty 50 fell by 384 points to 23,063. This marked the Nifty 50's lowest point in 118 trading sessions, reminiscent of April 7. The Sensex also reached a 76-session low, echoing levels from June 11.
All major Nifty sectoral indices ended in the red. The Nifty Smallcap 100 and Midcap 100 indices also dipped by 1.53% and 2.08%, respectively. The Indian rupee weakened by 22 paise to 95.96 against the US dollar, amid heightened geopolitical tensions driving crude oil prices towards $102-$106 per barrel. US Treasury yields, particularly the 10-year bond, surged to levels not seen since 2007, and the greenback strengthened.
Vaibhav Chugh, CEO of Abakkus Mutual Fund, attributed the sharp decline in domestic equities to the US 10-year Treasury yield reaching its highest level in nearly two decades, compounded by hawkish remarks from Federal Reserve officials hinting at further rate hikes. The yield on the 10-year Treasury surpassed 5.10%, a level last observed in 2007.
Foreign institutional investors (FIIs) might remain cautious due to rising US yields, which offer higher risk-free returns. IRDAI's proposed tighter caps on distribution payouts also contributed to selling in select stocks. Chugh suggested that while India's valuations have moderated, they are not yet appealing for significant FII returns.
Corporate earnings have remained strong, and sustained resilience in earnings could eventually entice FIIs back to India.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
