Falling local bond yields, slower pace of rise in US yields signal positive momentum: Rohit Srivastava

While bond yields are falling back home, the slower pace of rise in US bond yields indicates that we are nearing the peak of the rate hiking cycle. This is expected to have a positive impact on the equity markets, said the founder of Indiacharts Rohit Srivastava on September 16 as he participated in Moneycontrol's X Spaces.

He said, “The 10-year Indian bond yield peaked sometime last year and from what was looking like a consolidation between two and a half percent to a point actually broke down from that pattern early part of this year. The yields stayed at 7 percent for a while and then bounced back and made a lower high of around 7.25 percent."

In theory, a rising bond yield is negative for equities. This is because higher yields would equity investments less attractive.

According to Srivastava, the trend for bond yields in India is clearly downward. When the market senses declining yields and interest rates, it becomes a strong positive. “On last Friday, bond yields fell from 7.25 percent to 7.1 percent. This has broken the upward trend that was there for the last month and has set up the trend to the downside again. So yields in India are clearly going down,” he added.