Lunchtime Market Update: US Bond Yields Ease, Sparking Market Relief as Nifty Surges Past 19,550

05 Oct, 2023

Lunchtime Market Update: US Bond Yields Ease, Sparking Market Relief as Nifty Surges Past 19,550

Indian equities, represented by the Sensex and Nifty, rebounded on October 5, breaking a two-day losing streak, primarily driven by the easing of oil prices and US bond yields. The US bond yields, which had surged to multi-year highs, experienced some relief due to weaker-than-expected labor data, contributing to a more positive global market sentiment.

Around 12:04 pm, the 30-share Sensex surged by 0.73 percent to reach 65,702, while the broader Nifty 50 advanced by 0.65 percent to 19,563. Of the shares traded, 1,929 advanced, 1,053 declined, and 106 remained unchanged.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, "The triple whammy of a surging dollar, rising US bond yields, and crude oil prices are slowly subsiding, creating a path for a market recovery." Although the decline in the dollar and US bond yields is moderate and not sufficient to reverse FII selling trends, the significant correction in Brent crude oil prices to $86 is a notable positive development. This correction is likely to benefit stocks in oil-consuming sectors such as paints, aviation, and tires.

Despite strong fundamentals, banking stocks have faced pressure due to continuous FII selling. However, the upcoming second-quarter results for banks are expected to be favorable, leading to attractive valuations and a potential buying opportunity for investors.

Notable stock movements included Tata Consultancy Services, which saw a 2.4 percent increase after being selected by the Georgia Department of Labor for a cloud-based unemployment insurance system project. L&T Financial Holdings gained 3 percent following its report of Rs 13,490 crore in retail disbursements in Q2FY24.

On the downside, NHPC's stock declined by 2 percent as the Teesta-V Power Station and Teesta-VI HE Project in Sikkim were affected by a flash flood. Marico also experienced a 3.2 percent drop in its stock price due to a marginal decrease in consolidated revenue on a year-on-year basis.

In the broader market, positive sentiment prevailed, and the India VIX, a measure of market volatility, fell by 4.86 percent. The Bank Nifty index traded near its daily high at 11:30 am, up nearly 1 percent. IT and media stocks also posted gains, with their respective sectoral indices rising by 1 percent each. Conversely, the Pharma, FMCG, and PSU banking sectors traded lower.