Sensex, Nifty Face Flat Start as Soaring US Yields and Oil Prices Temper Global Rally

Sensex, Nifty Face Flat Start as Soaring US Yields and Oil Prices Temper Global Rally​

Indian benchmark indices are poised for a marginal start on Friday after GIFT Nifty indicates only minor gains. Despite yesterday's strong rebound in Indian equities, heightened pressure from rising global bond yields and climbing crude oil prices threaten to temper bullish sentiment across markets today.

Overnight Market Stress: US Bond Yields Resume Ascent​

Stress in global fixed income markets continued to weigh heavily on equity valuations overnight. The relief seen earlier this week from a Treasury intervention proved short-lived as the narrative shifted towards inflation concerns.

The US 30-year Treasury yield resumed its climb, reaching around 5.25 percent. Meanwhile, the benchmark 10-year yield touched 4.71 percent. Higher bond yields are widely noted to make emerging market assets less attractive for foreign investors.

Global Equities React to Economic Headwinds​

The renewed rise in yields dragged Wall Street stocks lower on Friday. The Dow Jones Industrial Average dipped 703.84 points, or 1.32 percent, closing at 52,759.21.

S&P 500 declined 0.87 percent to 7,641.16, while the Nasdaq Composite fell 1 percent to 26,067.17. Disappointing results from retail bellwether Walmart further hurt overall sentiment in global markets.

Crude Oil Surges Near One-Month High amid Geopolitical Tensions​

Crude oil prices have become a major concern for domestic investors due to the ongoing diplomatic impasse in the Gulf region. The tensions between the US and Iran pushed Brent crude futures near its highest levels in approximately one month.

Brent crude earlier touched $94.71 a barrel before settling lower. Futures were last trading down 0.7 percent at $93.12 per barrel, though they remain more than 5 percent higher for the week. US crude eased 0.7 percent to $86.18 a barrel.

Asian Markets Trade Mixed Amid Bond Concerns​

Asian markets displayed mixed performance as investors navigated elevated global yields and oil prices. MSCI's broadest index of Asia-Pacific shares outside Japan registered a gain of 0.5 percent. South Korean and Taiwanese equities also moved higher in the morning session.

Japan's Nikkei, however, faced headwinds, falling 0.8 percent and being on track for a weekly decline exceeding 4 percent.

Indian Indices Bounce Back After Prior Day Rally​

Indian stocks had staged a strong rebound in the previous trading session following initial relief provided by easing US Treasury yields. The Sensex climbed 628.04 points, or 0.82 percent, settling at 77,537.72.

The Nifty followed suit, gaining 153.55 points, or 0.64 percent, and closing at 24,231.85. GIFT Nifty indicated a marginal gain, trading at 24,322.5 around 7:45 am, up 25 points, or 0.10 percent.

Technical Outlook: Support Levels Crucial for Nifty Recovery​

Bajaj Broking provided specific technical guidance for the Nifty index moving forward. The brokerage suggested that a sustained move above 24,265 could extend the recovery towards 24,400.

Conversely, failure to cross this level is expected to keep consolidation range within 24,000-24,250. The analysis indicated stronger support remaining at the 24,000-23,800 zone and a broader target of 24,000-24,600.

Foreign Flows Face Scrutiny as Dollar Yields Climb​

Domestic institutional investors provided continued backing to Indian equities on Thursday, purchasing shares valued at Rs 3,537 crore. Conversely, foreign institutional investors turned net sellers, offloading equities worth Rs 583 crore.

Foreign flows are expected to remain a key focus moving forward. This is primarily due to the likelihood of rising US Treasury yields potentially increasing the relative attractiveness of dollar-denominated assets.