Panic Bond: Equities crash on global sell-off, high yields


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 Sell-offs in global bond markets sparked panic in India's benchmark equity indices which declined the most since May 2020 on Friday.

Investors fear a reversal in the global lower interest rate cycle due to high US treasury bond yields.

In domestic market, FIIs turned net sellers.

On Friday, FIIs took out Rs 8,295.17 crore in BSE, NSE & MSEI in the capital market segment.

Accordingly, the two key indices had a gap-down opening and subsequently fell through the day's trade session.

Besides, all sectoral indices ended lower with banking stocks emerging as the top laggard followed by auto, metals, media and IT.

The India Volatility Index ended 22.9 per cent higher at 28.14, highest since July 2020.

The S&P BSE Sensex lost by 1,939.32 points, or 3.80 per cent, to come down to 49,099.99 points from the previous close of 51,039.31.

The NSE Nifty50 on the National Stock Exchange closed at 14,529.15, lower by 568.20 points, or 3.76 per cent, from its previous close.

"Global stocks fell on Friday, with Asian shares down by the most in nine months, as a fall in global bond markets sent yields flying and alarmed investors amid fears the heavy losses suffered could trigger distressed selling in other assets," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"Now the Nifty could head towards the 14,281-14,336 band over the next few days with some intermittent bounces."

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said: "Rising bond yields, geopolitical tensions and concerns over inflation have piled pressure on the market. Surge in VIX has given tight grip to bears and is likely to put pressure on the market at any bounce."

"Going ahead the market may continue with its consolidation given weak global cues. Investors would closely track bond yields, geopolitical tensions and inflation data for further market direction and would monitor developments around new US stimulus announcement."

Vinod Nair, Head of Research at Geojit Financial Services, said: "Domestic markets tumbled in line with global trend triggered by a sharp rise in bond yields. Increasing geopolitical tension between the US and Syria aggravated the selling."

"The market will gain momentum as the global market is expected to stabilise supported by maintaining accommodative monetary policy and a growing economy."
Source: IANS

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