The Indian stock market saw a sellout for the second consecutive day today, causing the BSE benchmark indices Sensex and NSE Nifty to fall by nearly 2%.
The Indian stock market witnessed selling for the second consecutive day, causing the BSE benchmark index Sensex and NSE Nifty to fall by nearly 2%. Sensex was trading at 49,840.55 points, down 1.90% or 952.16 points at 1.30 pm. At the same time, Nifty was also trading at 14,764.19 points, losing 1.80% i.e. 266 points. With the Sensex, the BSE midcap saw a fall of 1.89% and the small cap by 1.19%.
Market experts say that the market trend is not clear. There is no idea about which side the camel will sit. The dollar index has declined and is at 9.16 points, which are positive signs for Capital Inflows. But the 10-year US bond yield has increased to around 1.64%, which is a matter of concern.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that the rise in commodity prices is a concern for core inflation. He said the market has also been affected by the rise in new cases of corona virus. He instructed the investors that the market valuation is still high, so the possibility of correction cannot be ruled out.
Declining bond yields rise due to these 5 reasons
Selling pressure on equities has increased due to increase in bond yields in the US including India. The 10-year bond yield in India is 6.20% and in the US it is 1.64%. Harshad Chetanwala, co-founder of Mywealthgrowth.com, said that the increase in bond yield has increased the cost of companies’ capital, which has negatively impacted the valuation of their stocks. He said that if the central bank allows bond yields to rise, it means that liquidity support will be reduced. When the bond yield increases, investors start selling equity and invest in bonds.
Inflation concerns
The second reason for the fall in the market is the possibility of rising inflation due to increase in access liquidity and bond yields. Inflation may also increase due to the ongoing relief package in the US. At the same time, CPI in India increased to 5.03% in February from 4.1% in January. This has increased concerns about the economic revival.
Deteriorating growth:
India’s industrial growth (IIP) declined 1.6% in January, prompting investors to believe that growth is losing momentum. IIP has dropped due to a decline in manufacturing and mining. This also had a negative impact on the market.
Corona cases rise
New cases of corona virus outbreaks have increased rapidly in many countries around the world including India. On March 14, 25,320 new cases of corona were reported in India. This is the highest number of new cases in the last 84 days. Due to this, many cities of Maharashtra have been put on lockdown again. This has led to Corona’s fear of another wave. The market has also fallen.
Technical
reasons are also the technical reasons for the decline in the market. Nifty has given its support of 14,800 and it can come at the level of 14,500. Rohit Singre, senior technical analyst at LKP Securities, said that until it reaches above 15,200, market stability will not come. Market experts have asked investors to be cautious in taking large positions. He says that there will be volatility in the market right now.
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