The Wrap🌯 22nd Oct 2023 | US10Yr Bond Yields touch 5%
Your weekly digest of everything important in Indian Stock Market
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Bonds Yields continue to climb higher, Oil advances towards $100/barrel, Indian markets continue to consolidate
And finally it happened this week! US 10 year bond yields touched 5% briefly before settling at 4.918%
No broad based rally in any market globally can take place until the big daddy of bonds - the US 10 year yield stabilizes. Given the Indian market breadth, which continues to be in the top percentile, its likely that we are in a period of relatively long consolidation and should not expect the firework rally from March end to mid September of this year.
The war in Middle East and continued stand off in Ukraine is driving price of oil higher too with Brent now marching towards $100/barrel zone.
India (which imports most of its oil) has been shielded so far by discounted Russian oil imports. Lower cost of oil imports combined with RBI and Govt prudence during the pandemic has helped us control inflation domestically.
The real question is for how long can we sustain this with cheap imports of Russian oil? Our economy really starts fluttering the moment we have to import oil north of $100/barrel.
The broader market was pretty much flat this week, with Real Estate (being a high beta sector) taking a nose dive at -2.44%.
Given the continuing tense macro backdrop and earnings season, I would re-iterate the same advice as last week - be cautious!
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