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The Indian equity markets were directionless at noon on August 22, as investors remained cautious amid a sharp spike in US bond yields. The 10-year yield at 4.34 percent surged to its highest since 2007.
At 12 pm, the Sensex was up 0.18 percent at 65,332.59, and the Nifty was up 0.19 percent at 19,430.50. About 2,088 shares advanced, 987 shares declined, and 103 shares were unchanged.
Broader market momentum continued to remain strong as both midcap and smallcap indices rose 0.8 percent.
Wall Street analysts believe the surge in bond yields reflects that interest rates could potentially be quite higher for quite longer.
“Rising yields is negative for India as it will impact capital flows to equity markets. Sustained rise in FII inflows will happen only if the US bond yields decline,” Dr. V K Vijayakumar, chief investment strategist at Geojit Financial Services said.
Sentiments also remain sluggish amid persistent Chinese economic concerns. “Technically, Nifty bulls are likely to hesitate as long as the 19,525-19,550 zone is a resistance area. On the downside, bears will become active if Nifty slips below the 19,251 mark,” Prashanth Tapse, Senior VP (Research), Mehta Equities said.
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Among top gainers, insurance stocks got a new lease of life. HDFC Life surged 3.6 percent in trade and SBI Life gained 1.8 percent, to become the top two gainers on Nifty 50. Meanwhile, LIC gained 2.2 percent and GIC rallied over 7.7 percent.
Insurance stocks had taken a beating in February when finance minister Nirmala Sitharaman announced in her Budget speech that income from traditional insurance policies where the premium is over Rs 5 lakh will no more be exempt from taxes.
Since then, the stocks have recovered 40-50 percent from the lows.
Among losers, Cipla, BPCL and TCS took the top three spots on Nifty 50, down over 0.6 percent each. In the midcap space, Aurobindo Pharma lost 2.5 percent after Citi downgraded the stock from Buy to Sell due to limited visibility on the generic pipeline.
Going ahead, investors can expect more stock-specific action, while global markets try to find direction from Fed Chairman Jerome Powell’s speech at the annual Jackson Hole symposium. Powell is scheduled to speak on August 25.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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