Street Signs: Softening US bond yields, promoter buying a cue for traders

Yield lifeline: US bond drop throws Indian markets a much-needed rope

 

A decline in US bond yields has provided some relief to Indian markets, which have been grappling with the strain of foreign portfolio investor (FPI) outflows. The yield on the 10-year US Treasury has dropped by 32 basis points to 4.304 per cent from 4.625 per cent on February 12. Market experts underline the strong correlation between US bond yields, domestic market performance, and FPI flows. Lower US bond yields make Indian markets more attractive to FPIs, encouraging investment in emerging markets like India. According to a note by Elara Capital, India-dedicated outflows from US funds have slowed, with only $15 million withdrawn this week — the lowest outflow since January 25. However, India-dedicated funds have seen generous outflows since October 24, amounting to $4 billion, with $3.2 billion withdrawn in 2025 alone. These outflows were spurred by hardening US yields, which increased from 3.7 per cent in October to 4.8 per cent in January, influenced by shifts in US Federal Reserve rate-cut expectations and uncertainty around US tariffs.

 

Derivatives Sword of Damocles: Sebi’s new proposals hang over traders

 

The Securities and Exchange Board of India’s (Sebi’s) efforts to regulate derivatives trading have already begun impacting trading volumes, with additional proposals expected to further reduce them. Market participants are wary that the new proposals, particularly those regarding gross and net position limits for intraday and end-of-day derivatives trading, could restrict the participation of major players like foreign portfolio investors and proprietary desks. Industry insiders reveal that several market participants are urging Sebi to reconsider some of the proposals. “While there are growing concerns that large foreign brokers may be exploiting small investors, Sebi must balance protecting small investors with ensuring India’s liquid derivatives market remains intact,” said a broker.

 

Promoter buying: The canary in the coal mine for Indian markets

 

Indian markets have been facing a tough period recently, with continued selling by foreign portfolio investors adding to the uncertainty. As traders search for buying signals, one key indicator has emerged: promoter or insider buying. While instances of promoter groups increasing their stakes have been rare this year, a few notable cases have propelled stock prices higher. For instance, when Jindal Power, a promoter entity of Jindal Steel & Power (JSPL), acquired shares worth roughly ₹800 crore from the open market, the company’s stock saw a noticeable rise. Over the past fortnight, JSPL shares have gained nearly 10 per cent, even as the Nifty has fallen by 3 per cent. Other stocks benefiting from promoter purchases include Maharashtra Seamless and Godrej Properties. These instances suggest that promoter buying can offer valuable insights for traders navigating current market volatility.