Indian markets today joined a global sell-off as investors panicked ahead of US inflation data, later today. The Sensex was down over 1,000 points when it hit the day’s low at 54,205. The ECB said on Thursday it would raise interest rates next month for the first time since 2011, with a potentially major move to follow in September. The rupee also hit a record low today.
“The strengthening of the US 10-year bond yield to 3.05% can be interpreted as a market discount to worse than inflation data in the US. If inflation figures are worse than expected, equity markets may be in a bearish state.” If that doesn’t happen, the market will stage a rally next week,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
“Meanwhile, rupee depreciation is turning out to be a tailwind for the IT industry. Since banks increased lending rates soon after the repo rate hike, they are likely to deliver good results in the coming quarters. Calibrated buying on fall in banking and IT stocks can give good returns to investors in the medium term.”
The two-year US Treasury yield, which rose in line with traders’ expectations of higher fed funds rates, continued its climb to hover around the highest level since early May. It touched 2.8352% compared to the US close of 2.817%.
“The sentiment for the Nifty June series remains weak. Sell at reasonable growth for the near term. Only a strong ripe reversal will change the monthly outlook. Select stocks are available at medium-term price levels while the risk reward remains largely low. Liquidity continues to be the main reason behind the current corrective phase,” said Sahaj Agarwal, Head of Research – Derivatives at Kotak Securities.
The yield on the benchmark 10-year Treasury notes fell to 3.0401% compared to the US close of 3.042%.