Bond yields, profit booking unleash bears, banking stocks down

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SME Times News Bureau | 05 Mar, 2021
India's key equity indices ended lower for the second straight day on the back of weak global cues which emanated from rising global bond yields on Friday.

Accordingly, the two indices had a gap down opening on account of weak global cues, high volatility and profit booking.

Besides, the India VIX spiked above 25 zones signalling shakiness.

Subsequently, the advance decline ratio slightly tilted towards the declining counters.

On Friday, FIIs inflows net sold Rs 2,014.16 crore.

Among sectors, almost all indices ended in the negative with PSU bank, metals, banks, IT, pharma falling the most.

Globally, a late rally in Chinese shares helped pull Asian stocks off one-month lows as investors picked bargains after equity investors were rattled by a sell-off in the US Treasuries which sent yields rising and hoisted the dollar to a three-month high.

Furthermore, rising US bond yields put European equities under pressure again on Friday after Federal Reserve Chair Jerome Powell's remarks failed to calm investor concerns about a recent surge in borrowing costs.

Consequently, the S&P BSE Sensex fell 440.76 points, or 0.87 per cent, to 50,405.32 points from the previous close of 50,846.08.

The NSE Nifty50 on the National Stock Exchange closed at 14,938.10, lower by 142.65 points, or 0.95 per cent, from its previous close.

"Nifty ended the week in the positive after two weeks of losses and recovered some of the lost ground even on Friday. However, investors in Indian equities will look at the trend of bond yields abroad to assume higher risk and in the meanwhile the markets could consolidate or correct," said Deepak Jasani- Head of Retail Research at HDFC Securities.

"14,208-14,491 is the next support band, while 15,150-15,266 remains a crucial resistance."

According to Vinod Nair, Head of Research at Geojit Financial Services: "Domestic markets echoed the global sentiments led by consolidation in the global market. Confusion persists in the global market ahead of the Fed policy meet, as the market expects confirmation on maintaining its super accommodative stance in a rising bond yield market."

"Additionally, Fed's measures to maintain the interest rate low and high liquidity will also provide relief to the market sentiment."

In addition, S.Ranganathan, Head of Research at LKP Securities said: "Indices opened weak on the back of Jerome Powell remarks and rising oil prices."

"Profit booking in metals and financials kept markets in the red throughout the day."