Sensex, Nifty in for a jittery session as bond yields rise? 5 thing to know before opening bell

Domestic benchmark indices soared on Wednesday, moving higher for the third consecutive trading session, backed by growing economic optimism and vaccination drive picking up pace. BSE Sensex now sits at 51,444 while the 50-stock NSE Nifty is above the 15,200 mark. However, bond yields in the United States have risen once again, causing Wall Street indices to register another sell-off. On Thursday morning, Asian peers were mirroring global peers and sliding down. SGX Nifty was deep in red, falling 200 points during the early hours of trade. 

Global watch: NASDAQ slipped to a two-month low, falling 2.7% during yesterday’s trading session. S&P 500 was down 1.3% and Dow Jones sipped 0.39%. Among Asian peers, Hang Seng, Shanghai Composite, TOPIX, Nikkei 225, KOSPI, and KOSDAQ were all sitting deep in red.

Bond yield rise: Bond yield shot up in the United States on Wednesday. Although the 10-year Treasury yield soared 8 basis points to reach 1.49%, it was still lower than the 1.6% high it claimed last week. The rising bond yields raise worries about inflation and stretched valuations.

Technical take: On the charts, Nifty has nullified last week’s negative pattern, hinting at further upside in the short term, according to Nagaraj Shetti, Technical Research, Analyst, HDFC Securities. Patterns also indicate caution for investors. “Technically, the Nifty / Sensex is recovering from a corrective pattern and traders need to be cautious until the Nifty 50 index comfortably cross 15435,” said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

Support and resistance levels: Now, for Nifty 15,430 is to be watched on the upside while support for the index is placed at 15,160, said Shetti of HDFC Securities. Meanwhile, Shrikant Chouhan said that indices may remain range-bound between 15370/51800 to 15100/51000 on the closing day of the weekly period of options contracts. “The Nifty / Sensex may move to the level of 16000/54200 in the next few days or weeks on the decisive dismissal of the level of 15435/52520,” he added.

FII and DII trades: On Wednesday Foreign Institutional Investors and Domestic Institutional Investors were net buyers, pumping in Rs 2,088 crore and Rs 392 crore into the market. FIIs were also net buyers of Index futures and options, along with stock futures and options.