Tuesday, 6 February 2018

Indian Indices Continue Sell-Off; Realty Sector Down 5.1%

Indian share markets are trading deep in the red presently. The sell-off is seen on the back of steep overnight losses on Wall Street with Dow’s historic plunge.

Sectoral indices are trading in the red with stocks in the realty sector and consumer durables sector witnessing maximum selling pressure.

The BSE Sensex is trading down 1,026 points (down 3%) and the NSE Nifty is trading down 308 points (down 2.9%). The BSE Mid Cap index is trading down by 3.2%, while the BSE Small Cap index is trading down by 3.7%. The rupee is trading at 64.27 to the US dollar.

While rupee and stocks witnessed losses owing to the above sell-off, while bonds were marginally lower on the back of brisk selling from corporates and banks. India’s benchmark 10-year bond yield was down around 6 basis points at 7.54%.


Foreign debt raised by Indian companies has surged ten-fold to US$ 41 billion in 2017. This is the highest ever infusion of foreign funds in the domestic debt markets in the last 15 years.

At US$ 23 billion, foreign investments in government securities and corporate paper took the cake. This was followed by dollar denominated bonds that attracted around US$ 16 billion of foreign investments whereas funds of US$ 2 billion were mopped up by masala bonds. Masala Bonds are rupee-denominated borrowings by Indian entities in the overseas markets.

All this has made the Indian bond market flush with foreign debt investments lately, as can be seen from the chart below:

Bond Markets on a High


Apart from the above, the recent sovereign rating upgrade by Moody’s coupled with factors such as economic stability, abundant global liquidity and diversification needs of investors have stoked demand for Indian bonds in the overseas markets.

Stocks in focus in today’s trade include Tata Chemicals, Hero MotoCorp, Apollo Tyres and Shaily Engineering Plastics.

Market participants are also keeping tabs on banking stocks as their bond profits may take a hit amid surging yields.

Apart from the above, in the news from macroeconomic front, India’s gold imports in January dropped to their lowest in 17 months. This was seen as buyers postponed purchases in expectation of cuts in the import tax.

This article was originally published in English at www.equitymaster.com

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