It is a bloodbath for the stock market in India. In the opening session, the equity benchmark Sensex tanked over 1,000 points on Friday. As the closing time neared, Sensex was down below 2,000 points at around 48,944 points. In the case of Nifty, it traded below 14,500 points, down by more than 600 points.
The US market tumbled as well, following the suite was its Asian counterparts. In the case of Australia's S&P/ASX 200, it fell by 2 percent in early trade. Asian counterparts like Japan's Nikkei and Hong Kong's Hang Seng index futures was down by 1.8 percent and 1.69 percent respectively.
But what caused this bloodbath across the equity markets?
This was mainly driven due the US benchmark yield which increased leading the markets to tumble. The 10-year US Treasury note spiked to yield 1.614 per cent and later traded well above the estimated 1.48 per cent dividend yield of companies in the S&P 500, reported Reuters.
This spike did not go well among many investors across the world.
In addition, what added to India’s woes can be the anticipation about the NSO (National Statistical Office) data on gross domestic product (GDP) along with a report by Acuité Ratings stated the yields are likely to rise from 5.82 per cent now to 6 per cent by the end of March this year.
The benchmark bond (10-year tenor) yields had fallen to 5.6 per cent during the peak of the pandemic crisis but have since been rising and jumped 31 bps since the Budget.
One cannot forget to factor in the rising cases of COVID-19 which is still a concern for investors.