Bonds surge on the stock market

Increased bond yields in the US saw heavy selling in markets around the world today, which also affected the domestic market. The domestic market recorded the biggest one-day decline in 9 months. The 10-year US bond rose 1.61 per cent to 1.08 per cent at the beginning of the month. This has led investors to fear the end of the slowdown in monetary policy. In most countries, not only the US, but due to the possibility of inflation after the epidemic, the returns of government bonds have increased.

The benchmark Sensex dropped 1,939 points to close at 49,100. The Nifty also ended with a loss of 568 points at 14,529. This is the biggest single-day decline in the Sensex since May 4, 2020. Except Japan’s Nikkei, domestic markets fell the most compared to most global markets. Nikkei closed at about 4 per cent loss.

Experts say that earlier in February, the Indian market had outperformed the global markets. In such a situation, it has declined more. The Sensex had risen nearly 13 per cent in February. Last week it reached a record high of 52,154. Now the Sensex has come down about 6% from its highest level, but overall it closed at 6% gain in February.

Analysts say the market could fall further if bond yields remain strong. However, some believe that the sell-off in the US on Thursday is the technical reason and the return has come down to 1.5 per cent. Saurabh Mukherjee, founder of Marcellus Investments, said, “The fall in the market is mainly due to psychological reasons as the Federal Reserve and Reserve Bank of India have not given any indication of increasing inflation or lowering the cash supply.” There has been upheaval in the market due to inflation by some investors and speculation of a sharp rise in bonds.

Jyotivardhan Jaipuria, founder of Valentis Advisors, said that the market was booming and was looking for a suitable reason for the decline. He said, “The market performed very well in February and the excuse for the fall was being explored. Improving the economy and accelerating vaccination will prove to be good for the market ahead. Bond yields were at their all-time low and they had to pick up.

Market participants say that investors’ perception has also been affected by the news of the US carrying out airstrikes on Syria. Along with this, domestic investors were being cautious before some important economic data came out.

ONGC recorded the highest decline of 6.6 per cent. Mahindra & Mahindra declined 6.35 per cent and Axis Bank 5.98 per cent. India Wix, a market that measures market volatility, rose 23 per cent to close at 28.14 today. Experts say that there is a possibility of further rise in Wix.