Markets opened on a subdued note on Thursday, May 22, as a sharp rise in global bond yields triggered a broad sell-off in equities. The Nifty 50 slipped below the 24,600 level during the weekly expiry session, while the Sensex dropped over 700 points.
At around 9:30 am, the Sensex was down 571.69 points, or 0.70 per cent, at 81,024.94, and the Nifty fell 175.40 points, or 0.71 per cent, to 24,638.05. Market breadth was negative, with 988 stocks advancing, 1,312 declining, and 147 remaining unchanged. Volatility spiked, with the India VIX rising 3 per cent to 18.04, reflecting heightened caution among investors. Barring metal and media sectors, all other indices traded in the red. The Nifty IT, Auto, and Consumer Durables indices were among the worst performers, each dropping up to 1.2 per cent.
Broader markets fared slightly better than the benchmarks. The Nifty Midcap index declined by 0.4 per cent, while the Smallcap index slipped by 0.2 per cent.
“There is slight risk off in global markets. This is evident from the strength in alternate assets like gold and Bitcoin. The fundamental issue is the high fiscal deficit of the US which the market feels is unsustainable. Rising US bond yields are usually negative for emerging markets,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
“But the situation is slightly different now. The root cause of the problem is the unsustainable US fiscal deficit and debt. This may trigger some capital flows away from the US to other economies where prospects for growth and earnings are better,” he added.
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Global Market
Wall Street closed sharply lower overnight, as investor sentiment soured amid growing concerns over a major tax and spending bill making its way through the US Congress. The proposed legislation, which could substantially increase the federal deficit, weighed heavily on market confidence.
The Dow Jones Industrial Average dropped 1.91 per cent, the S&P 500 fell 1.61 per cent, and the Nasdaq Composite lost 1.41 per cent—marking the worst single-day performance for all three indices in a month.
The ripple effect was felt across Asia on Thursday, with major indices opening lower. Japan’s Nikkei 225, South Korea’s Kospi and Kosdaq, and Hong Kong’s Hang Seng Index all declined by more than 1 per cent, as US fiscal concerns and continued weakness in Treasuries pressured global markets.