Markets in bear hug; weak global trends, crude prices weigh

Benchmark stock indices Sensex and Nifty fell for the third day running on Friday due to weak trends in global markets and soaring crude oil prices.

Foreign fund outflows also weighed on investor sentiments amid strengthening US bond yields which are nearing 5 per cent for the first time since 2007.

The 30-share BSE Sensex fell 231.62 points or 0.35 per cent to settle at 65,397.62.

During the day, it plunged 320.63 points or 0.48 per cent to 65,308.61.

Falling for a third straight day, the Nifty declined 82.05 points or 0.42 per cent to 19,542.65.

In three sessions to Friday, Sensex dropped 1,030 points while Nifty tanked 268 points due to selling pressure.

Among the Sensex firms, ITC, Tata Steel, Hindustan Unilever, State Bank of India, JSW Steel and Power Grid were the major laggards.

Kotak Mahindra Bank, IndusInd Bank, Tata Consultancy Services and NTPC were the major gainers.

Vinod Nair, Head of Research at Geojit Financial Services said, "The added uncertainty stemming from West Asia tensions and the imperative for continued monetary tightening emphasized by the US Fed Chair created a layer of volatility in the market.

"While heightened oil prices and elevated US bond yields will impact the domestic monetary environment and operational metrics of the companies."

In Asian markets, Seoul, Tokyo, Shanghai and Hong Kong ended in the negative territory.

Global oil benchmark Brent crude jumped 1.14 per cent to $93.40 a barrel.

"Rising rates are intuitively not positive for equity markets.

"With US government bonds giving 5% dollar returns, the ask rate for equities goes up significantly if one were to adjust for risk premium and currency hedging," Alok Agarwal, portfolio manager at Alchemy Capital Management said.

The yield on the 10-year Treasury touched 4.99 per cent, up from 4.91 per cent late Wednesday, before paring its gain to 4.98 per cent. Early Friday, the 10-year Treasury yield was 4.94 per cent.

Brent crude, the international standard, picked up $1.29 to $93.67 per barrel as escalating Hamas-Israel conflict fueled supply concerns.

Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,093.47 crore on Thursday, according to exchange data.