Updated: February 27, 2021 5:51:33 am
Markets WORLDWIDE, including India, fell on Friday as a fall in global bond markets sent yields flying and alarmed investors, amid fears the heavy losses suffered could trigger distressed selling in other assets. The benchmark Sensex plunged 1,939 points, or 3.8 per cent, to 49,099.99 and the Nifty50 fell 568 points, or 3.76 per cent, to 14,529.15 as investors sold off stocks across the board.
The rupee fell 104 paise to settle at 73.47 against the US dollar following a heavy selloff in domestic equities and strong American currency in the overseas market.
Frontline indices, led by banking and finance stocks, fell by more than 3.75 per cent, a rare thing in an otherwise booming market recovering fast from the pangs of the pandemic-induced economic sluggishness. The rising inflationary expectations in the US and the consequent rise in bond yields — to 1.614 per cent level — have been a subject of intense discussion of late. “US inflation is expected to rise in the coming months, and therefore, the US yields too. The 10-year US treasury benchmark has already moved up swiftly to 1.50 per cent, a steep rise from its lowest point of close to 0.50 per cent,” according to Joseph Thomas, head of research, Emkay Wealth Management.
He said rising inflationary expectations and yields have a potential to adversely affect the equity sentiment and the equity markets. Indian bond yields have also seen a surge (6.22 per cent on Friday), tracking higher US yields and higher crude oil prices. The government couldn’t borrow the desired amount recently as it wanted to keep the yields lower while market participants are looking for higher yields.
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