Shillong, August 22: The surge in US bond yields is exerting its influence on capital flows to emerging markets, notably India, according to V. K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services. The current equity market landscape is shaped by two key factors.
As per IANS, firstly, the resilient state of the US economy is providing a foundation for global growth and equity markets on a global scale—a favorable development. However, the notable increase in US bond yields, with the 10-year yield reaching 4.34 percent (its highest level since 2007), is having adverse effects on capital movements to emerging markets, such as India.
The trajectory of Foreign Institutional Investor (FII) inflows is closely tied to the movement of US bond yields. The situation could potentially improve if US bond yields experience a decline, but this will be contingent on shifts in US inflation trends and the monetary stance adopted by the Federal Reserve.
Given these intricate macro trends, investors are advised to exercise patience and wait for clarity before making investment decisions. Meanwhile, those with a long-term perspective might consider accumulating high-quality growth stocks. While large-cap banks appear to be fairly valued, the outlook for major players in the capital goods sector appears promising.
As of Tuesday morning, the BSE Sensex has risen by 54 points, reaching 65,270 points. Notably, NTPC and Bajaj Finance have experienced gains exceeding 1 percent.