Sudden jump in US bond yields send shivers down the spine of market participants

Market Update at 1:20 PM:  A sudden spike in the US 10-year bond yields has sent shivers down the spine of the market participants. As a result, the Indian markets have entered into negative terrain. The  US 10-year bond yields have spiked nearly 5 per cent and it has inched higher to 1.73. Nifty trades below the 14,700 mark while Sensex has breached the 49,700 mark. Meanwhile, the advance-decline ratio is strongly in favour of the decliners. 

Market Update at 10:45 AM: Indian markets have trimmed half of their early gains with Nifty slipping below the 14,800 mark and Sensex just hovering around its important psychological mark of 50,000.  

The defensive sectors were seen weighing on the markets as Nifty Pharma and Nifty IT slipped by nearly 1 per cent. Infosys emerged as the top loser in Nifty 50 index, followed by Reliance Industries and Dr Reddy’s.  

On the other hand, Nifty Metal and Nifty Bank were seen supporting the index as they were up by 1.21 per cent and 0.80 per cent, respectively. HDFC twins have become the top contributors to the index by together contributing gains of nearly 28 points to the index.  

On the derivatives’ front, the banking stocks show maximum short-covering while technology sector shows maximum short built-up.   

Escorts has announced that Escorts Ltd Agri Machinery Business (EAM) has achieved landmark sales of 1,00,000 tractors in the ongoing fiscal year, surpassing the previous the highest-ever sales achieved during the entire fiscal year 2018-19.   

Besides, Welspun Corp zoomed by 1.5 per cent soon after the company announced that it has received multiple orders of approximately 93 KMT, valuing close to Rs 777 crore.   

Pre-Market Update: Nifty index continued to bleed red for the fourth consecutive trading session, led by broad-based sell-off. All the sectoral indices ended the day in red. At the headline level, Nifty 50 settled at 14,721, down by 1.27 per cent. Around 48 out of 50 stocks of Nifty50 index ended lower.   

The price action of the day has formed a sizeable bearish candle, carrying lower top and lower bottom. It was yet another day where the positive opening was a mere formality as the bears continued their rampage throughout the day. With this, the index breached its crucial dynamic support as defined by the 50-DMA and also, registered a distribution day as the volume was higher, compared with the previous session. And currently, the distribution day count stands at five.   

Nifty had breached its 20-DMA as of March 15 and now, the 20-DMA is trending downwards. So now, Nifty is trading below its 20 and 50-DMA. Since late October 2020, the 50-DMA has acted as sheer anchor support for the index. If we witness a follow-up selling on Thursday, then certainly, it will create a panic environment amongst the bulls’ camp!   

Now going ahead, the level of 14,575 is likely to act as a support level, followed by the recent swing low of 14,467.75, which was registered on February 26. These two-support levels are very crucial for the bulls. Meanwhile, the 14-period RSI has witnessed a breakdown of the symmetrical triangle-like pattern. Along with this, the weekly MACD histogram turned negative for the first time since May 2020.   

On the upside, the 20-DMA, which stands at 14,953, is likely to act as strong resistance in the near term. As long as the index sustains below its 20-DMA, the bears have an upper hand.