Sensex, Nifty fall for second day as rising US bond yields rattle global investors

Benchmark BSE Sensex tumbled over 440 points and the NSE Nifty cracked below the psychological 15,000-level on Friday due to profit booking in financials and IT stocks in line with relentless sell-offs in global equities as US bond market turmoil continued to rattle investors.

The 30-share BSE barometer declined by 440.76 points or 0.87 per cent to close at 50,405.32, continuing its falling trend for the second day due to concerns over bond yields. Intra-day, the index swung around 726 points.

The NSE barometer Nifty ended lower by 142.65 points or 0.95 per cent at 14,938.10.

"Domestic equities corrected for the second consecutive day as rise in 10-Year USA Treasury yields and commentary from Federal Reserve chairman on rising bond yields weighed on investors’ sentiments. Barring FMCG, all key sectoral indices witnessed sharp pullback with metals and PSU bank indices witnessing steeper correction in the range of 3-4 per cent,” said Binod Modi, Head - Strategy at Reliance Securities.

Over the last two sessions, the Sensex has shed 1,039.33 points or 2.02 per cent and the Nifty has lost 307.5 points or 2.01 per cent. However, on weekly basis, the Sensex gained 1,305.33 points or 2.65 per cent and the Nifty added 408.95 points or 2.81 per cent.

On the Sensex chart, IndusInd Bank, SBI, Dr Reddy’s, NTPC, ICICI Bank, HCL Tech and Bajaj FinServ emerged as major laggards. On the other hand, ONGC, Maruti, Kotak Bank, Nestle and Ultratech Cement were among the gainers.

Of the Sensex shares, 21 ended with losses. Clearly, rising bond yield fear, which appeared to have softened last week, has come to the fore again with back-to-back sharp rise in USA treasury yields, Modi said, adding that a higher bond yield reduces future earnings or cash flow projections and therefore premium valuations of equities become doubtful.

Foreign investors had offloaded equities worth Rs 223.11 crore on a net basis in Indian capital markets on Thursday, according to exchange data. Among sectoral indices, 17 closed in the red and two indices in the green on Friday.

BSE metal fell the most by 2.16 per cent, followed by power (1.80 per cent), telecom (1.77 per cent) and industrials (1.66 per cent). Broader smallcap, midcap and largecap indices underperformed the benchmark – plunging up to 1.89 per cent.

"Indices opened weak on the back of Jerome Powell remarks and rising oil prices. Profit booking in Metals & Financials kept markets in the red throughout the day. The key highlight was the huge response seen to the IPO of MTAR Technologies as investors rushed subscriptions on its last day today," S Ranganathan, Head of Research at LKP Securities, said.

Elsewhere in Asia, equity markets continued their decline on Friday after a retreat on Wall Street amid concerns that rising bond yields will lead to inflationary pressure. On the forex market front, the rupee closed 19 paise lower at 73.02 against the US dollar. Global crude oil benchmark Brent was trading 1.26 per cent higher at USD 68.11 per barrel.