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Domestic markets are likely to open weak on Wednesday as global equities remain under pressure due to rising US treasury yields. With the monthly F&O expiry on the NSE is on Thursday, Indian markets will be more volatile, said, analysts.
As the 10-Year US Treasury yield hit a high of 1.56 per cent on Tuesday, its highest level since June, analysts fear foreign institutional investors may resort to aggressive selling in risky assets such as India. FPIs on Tuesday sold shares worth 1957.70 crore.
The SGX Nifty at 17,670 indicates a negative opening for Nifty, as Nifty futures on Tuesday closed at 17,748.60. The US stocks, on Tuesday, tumbled, with tech-heavy Nasdaq slumping almost 3 per cent. While broader S&P 500 crashed over two per cent, Dow closed 1.6 per cent lower.
Most Asian markets in the early morning on Wednesday are down between 1 and 2 per cent.
The spot rupee closed at the highest level in a month at 74.04 against the dollar on the back of a sharp rise in US treasury bond yields and Brent crude oil prices. Brent crude has been trading at the highest level since October 2018 and TSY yields are at the highest levels since June 2021. Fed turning hawkish and rising oil prices, are pushing yields higher. Higher yields and higher oil prices are double negatives for the Rupee, as they can trigger outflows.
According to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities. Markets faltered as investors resorted to profit-taking after the record-breaking rally in the last few sessions. Investors booked profit in realty, IT, and select telecom and banking stocks that saw benchmark Nifty plunge sharply but trimmed losses to end below 17800 which is broadly negative.
"Technically, on daily charts, the index has formed a bearish candle which indicates further weakness from current levels. However, as long as the index is trading above the 20 days SMA, the uptrend texture is intact. We are of the view that the market has completed one leg of correction and now 20 days SMA and 17600 -17550 levels would act as a sacrosanct support zone," he added.
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