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Indian stock market set to fall as bond yields rise

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The BSE Sensex dropped 1,939 points to 49,099.99 and the NSE Nifty Index dropped 568 points at 14,529.15 amid massive sell-off

 Following a disastrous Friday, the Indian stock markets are set for another week where rising US bond yields will remain the focus of investors. Apart from bond yields, other factors such as geopolitical tensions between the US and Iran and the upcoming US fiscal stimulus package are likely to play a major role.

Domestic factors such as the positive GDP growth data for the previous quarter, February auto sales demand and PMI data will also remain the focus of investors.

The market may continue to consolidate 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, said Siddhartha Khemka, Head–Retail Research, Motilal Oswal Financial Services.

The benchmark BSE Sensex dropped 1,939 points to 49,099.99 on Friday and the NSE Nifty Index dropped 568 points at 14,529.15 as investors sold off stocks across the board. The massive sell-off was driven by a record rise in the 10-year US bond yield.

Ajit Mishra, VP-Research, Religare Broking said that Markets will first react to the GDP data that came in after the market hours on February 26 and that indications are pointing towards a further slide in the Nifty.

We expect volatility to remain high, so traders should maintain extra caution in risk-management aspects. The prudent strategy would be to use rebound to create shorts using options instead of naked futures, Mishra said.

Dhiraj Relli, MD & CEO of HDFC Securities, said that the Q3 GDP growth is lower than their estimate. The equity markets may be a tad disappointed with these data points but the mood at this point is anyway sombre.

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