Sensex drops 1.2%, Nifty ends at 15,081 over fresh bond market jitters

Analysts put the bond markets’ volatility down to positions taken by some traders betting on the possibility of the US Fed tightening monetary policy

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Sensex | Nifty | bond market

The Indian indices shed over 1 per cent on Thursday, after surging about 5 per cent over the three previous sessions, amid fresh jitters in the US bond market. Most global equities fell following the US markets, particularly the Nasdaq, after bond yields rose for the first time in three days.

The Sensex fell 1.16 per cent, or 599 points, to end at 50,846. It had jumped 2,345 points, or 4.8 per cent, in the previous three sessions. The Nifty50 fell 165 points, or 1.1 per cent, to end at 15,081. Thursday’s fall was triggered by the 10-year US Treasury note, which inched towards 1.5 per cent. The domestic 10-year benchmark government security also saw its yield rise to 6.2 per cent, the highest in 11 months.

Most market players were eyeing US Federal Reserve Chair Jerome Powell’s speech on Thursday, looking for a possible change in language ahead of the Fed’s March 16-17 policy meeting.

Analysts put the bond markets’ volatility down to positions taken by some traders betting on the possibility of the US Fed tightening monetary policy sooner than expected. However, Fed officials denied this.

“Investor sentiment turned weak amid meltdown in global markets due to surge in US bond yields. Volatility is likely to persist as the market would look at global cues for further direction. Investors would continue to track bond yields, inflation data and Covid situation, along with developments around the US stimulus,” said Siddhartha Khemka, head (retail research), Motilal Oswal Financial Services. “Nifty valuations are not inexpensive and demand consistent delivery of earnings. Rising bond yields may cap equity valuations.”

However, market breadth was positive on Thursday. On the BSE, total advancing stocks stood at 1,559, while 1,423 declined. The Nifty MidCap 100 and the Nifty SmallCap 100 rose 0.2 per cent and 1.2 per cent, respectively. “We expect the market to sustain 15,000-14,900 levels, before showing upside bounce again. Immediate resistance is placed at 15,200,” said Nagaraj Shetti, technical research analyst, HDFC Securities.

All Sensex components, barring five, ended the session with losses. HDFC was the worst-performing stock, falling 2.6 per cent. Bajaj Finserv and L&T declined 2.5 per cent and 2.3 per cent, respectively.

UltraTech Cement rose 4.3 per cent. Eleven BSE sectoral indices ended with losses. Metal and finance stocks fell the most, and their gauges declined 2.3 and 1.46 per cent, respectively.