Nifty snaps 7-day losing streak as US Treasury move eases yield pressure

Sensex rises 628 points and Nifty gains 154 points as easing US bond-yield pressure lifts sentiment, though elevated crude prices and geopolitical risks remain key headwinds

Indian equities gained in tandem with global peers on Thursday, with the benchmark Nifty snapping a seven-day losing streak after the US Treasury Department announced plans to curb rising long-dated bond yields.

 

The Nifty 50 ended the session at 24,232, up 154 points, or 0.64 per cent. The Sensex settled at 77,538, advancing 628 points, or 0.82 per cent. The two benchmarks diverged by 0.18 percentage points on the weekly expiry day for Sensex derivatives contracts. 

 

The total market capitalisation of BSE-listed firms rose by ~2.7 trillion to ~491 trillion.

 

The 30-year US Treasury yield pulled back from its multi-decade high of 5.31 per cent recorded on August 17, to trade near 5.23 per cent, after the US Treasury said on Wednesday that it would at least double the size of its liquidity-support buyback operations. However, yields hardened slightly on Thursday, rising by four basis points.

 

Meanwhile, Brent crude rose 2.51 per cent to trade at $92.29 per barrel as prospects for an imminent peace deal between the US and Iran remained muted. Elevated crude prices remain a key headwind for India, which imports more than 80 per cent of its oil requirements. 

 

While sentiment improved following the US Treasury announcement, risks to domestic equities remain elevated due to high energy costs. Going forward, geopolitical developments in West Asia and the upcoming address by Federal Reserve Chairman Kevin Warsh at next week's Jackson Hole Economic Symposium will guide market direction.

 

“Markets found much-needed relief after the US Treasury stepped in to contain the surge in global bond yields, triggering a strong, broad-based rebound and ending the domestic market’s week-long losing streak. The intervention has weighed on the dollar, which, along with a firmer rupee and easing yield pressures, has boosted the attractiveness of EMs. The recovery was widespread across sectors, driven primarily by strength in IT and financial stocks, as a cooling yield environment supports spending,” said Vinod Nair, Head of Research at Geojit Investments.

 

“The near-term outlook is likely to hinge on the direction of global yields, energy prices and geopolitical developments, with sustained stability needed to keep earnings momentum and foreign inflows intact,” Nair added.

 

Market breadth remained positive, with 2,373 stocks advancing against 1,951 declining on the BSE. Foreign Portfolio Investors (FPIs) were net sellers of ~583 crore, while Domestic Institutional Investors (DIIs) supported the market with net purchases of ~3,538 crore.

 

“Indian equities are expected to remain sideways with a marginal recovery bias, supported by value buying after seven consecutive sessions of decline and firm global cues. Broader market action and sector-specific opportunities are likely to remain in focus,” said Siddhartha Khemka, Head of Research, Wealth Management, at Motilal Oswal Financial Services.