Tuesday, July 23, 2024

Rise in US bond yields, moderation in India’s manufacturing activity leads to fall in equities

Equity indices logged losses amid a rise in the US bond yields and moderation seen in India’s manufacturing activity to five-month low of 57.5, Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, has said.

Except for PSU Banks, Realty, and Consumer Durables, all sectors ended in red. Auto saw profit booking after good September month sales numbers, while O&G fell following cool-off in Brent crude prices which has corrected to below $90/barrel, he said.

On the other hand, Housing Finance stocks gained after media report that the Finance Ministry has approved a Rs 60,000 crore incentive scheme for urban housing.

Overall, the GST collections remained robust at Rs 1.62 lakh crore, indicating strong economic growth.

However, given the global concerns of more US rate hikes along with 16-year high US 10-year bond yield and 7-month high Dollar Index, the sentiments remain dented and thus is resulting in profit booking, he said.

“In the near term, we expect this weakness to persist with stock-specific action. Investors would continue to take cues from economic data to be release globally and domestically with all eyes on RBI monetary policy due on October 6, Friday,” he said.

Deepak Jasani, Head of Retail Research, HDFC Securities says global shares fell on Tuesday, rumpled by a surge in the US bond yields that lifted the dollar after the US Fed officials served a reminder that borrowing costs won’t drop any time soon.

The Fed’s outlook has thrashed other rate-sensitive assets such as oil, which slipped again on Tuesday.

Yen trembled near a one-year low, keeping traders on alert for a possible intervention.

The India Manufacturing Purchasing Managers’ Index stood at 57.5 in September compared with 58.6 in August, showing mild signs of a slowdown in September, primarily due to a softer growth in new orders, he said.

Nifty failed to build on to a day’s gain again and faced the sell on rise scenario especially in largecaps. It could now remain in the 19,453-19,674 band for the near term with a downward bias. However the broader market continues to be doing well. This could get disrupted only on large back to back losses in the Nifty, he said.

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