Morning Alert..
*Rising US bond yields weigh on Indian stocks, add pressure on valuations*
Rising bond yields in the US and other advanced economies are making it tougher for Indian equities to attract foreign portfolio investors (FPIs), putting pressure on valuations and potentially weakening returns for domestic investors. The spread between the Sensex’s earnings yield and the US 10-year Treasury yield has turned negative and is now at its lowest level in 14 months. The US 10-year Treasury yield has risen by 102 basis points (bps), or about a quarter, since the end of September last year, from 4.15 per cent to 5.17 per cent on Friday. Over the same period, the Sensex’s earnings yield has risen by only 60 bps, from 4.5 per cent to 5.1 per cent on Friday. One bps is a hundredth of a percentage point. The narrowing gap makes Indian equities less attractive to the relatively risk-free returns available on US government bonds and other developed-market assets. Last Friday, Chief Economic Advisor (CEA) V Anantha Nageswaran flagged that the rising bond yields in advanced economies would make investors less willing to send capital to emerging markets, putting “pressure on capital mobilisation for a while”. Although the narrowing gap between US and Indian bond yields was welcome, investors still expected a premium of 200-300 bps, he pointed out. Markets, he said, could take time to recognise that debt in developed economies had become riskier, while even investor-friendly reforms may not produce quick results in such an environment.
*Global market action*
Dow Jones – Down by 0.34% or 175.41 points
FTSE – Flat
CAC – Down by 0.04% or 3.63 points
DAX – Up by 0.56% or 142.11 points
Gift Nifty – Down by 0.31% or 72.50 points
*FII/DII activities*
FII – Sold 3693.93Cr worth of shares
DII – Bought 2838.17Cr worth of shares.
*Major Indian Indices PE*
Nifty 50 – 19.6x
Nifty Bank – 13.2x
*Stocks with high delivery percentage*
Shyam Metalics and Energy Ltd – 82%
Nuvama Wealth Management Ltd – 79.7%
Aadhar Housing Finance Ltd – 75.9%
*Primary market activities*
IPOs opening today
Shree TNB Polymers Ltd (BSE SME) – Issue size 31.80Cr
Pind Hospitality Ltd (BSE SME) - Issue size 17.82Cr
SRIT India Ltd (Main board) – Issue size 218.40cr
Shivchem Agro Ltd (BSE SME) - Issue size 14.01Cr
Shah Investors Home Ltd (Main board) – Issue size 90.17Cr
Acme Universal Safezone 9 Ltd (BSE SME) - Issue size 35.93Cr
Listing today
Vivekanand Cotspin Ltd (BSE SME) - Subscribed 1.25x
FX Multitech Ltd (BSE SME) – Subscribed 17.72x
Robokidz Eduventures Ltd (BSE SME) – Subscribed 584.47x
*Commodities updates*
Gold – Rs 150701/10gm, Silver – Rs 234510/kg, Brcrude – Rs 8845/barrel, Copper – Rs 1407.95/kg.
