Will Higher US Bond Yields Put FII Pressure on Indian Markets?

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Will Higher US Bond Yields Put FII Pressure on Indian Markets?
Credit: © Reuters.

By Aditya Raghunath

Investing.com -- Most central banks across the world have taken a decision to ensure ample liquidity in their respective systems. This means they have left key policy rates unchanged and are willing to risk higher inflation if that means their economy will grow.

The US Federal Reserve has maintained its rates near zero and said that it expects inflation to rise along with growth. Last week, this decision caused the United States 10-Year in the US to shoot up to 1.7% from 1.64%.

Higher yields generally mean that it is expensive for companies to borrow money. This makes it more likely that investors sell growth stocks (that are usually overvalued) and move to ‘value’ stocks.

For India, it means that FIIs (foreign institutional investors) will sell emerging markets and hence, will sell off Indian stocks.

It doesn’t help that the rupee is also weaker against the dollar, and this is another indication that FIIs might sell India.

On April 12, when the BSE Sensex fell 3.44%, FIIs sold net shares worth Rs 1,746.43 crore. On April 13, when the BSE Sensex rose 1.38%, FIIs net sold 730.81 crore. In April, so far FIIs have been net sellers to the tune of Rs 4,013.97 crore.

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  • Chinmay Shahasane @Chinmay Shahasane
    currently nifty futures are in positive
    Like 0
  • Abhishek Singh @Abhishek Singh
    Nifty will go down tomorrow
    Like 4
  • midhun nair @midhun nair
    Yes , All news are negative towards Nifty we may see a free fall tommorow
    Like 4
    • Viren Patel @Viren Patel
      Yes it will go down
      Like 0
    • Rahul Oberoi @Rahul Oberoi
      If it goes below Monday low on closing bases, then a crackdown is on the cards. But, if the market goes high above Monday levels on closing basis, then we will again touch ATH of Nifty before coming back down. So, this week can be crucial 🧐
      Like 0
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