Mid-Day Mood | Spike in US bond yields pushes indices into red; corporate earnings in focus

Stock Market Today

The Indian benchmark indices continued to reel under losses despite coming off their day's lows as of mid-day on October 19. The Nifty and the Sensex mirrored the weak trend seen across global equity markets as a spike in the US 10-year bond yields to a 16-year high of over 4.95 percent dented sentiment for equities.

"The market responds to economic headwinds more than geopolitical tensions. From that perspective, the sustained rise in US bond yields is becoming a major challenge for the mother market of the US, and, thereby, for global markets. The market had not positioned for the US 10-year bond yield at 4.95 percent and, therefore, this unexpected spike in yields will take its toll on equities," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

"It is important to understand that the spike in bond yields is not due to monetary factors alone. The fiscal situation characterised by high deficit in the US is also contributing to the rise in yields through an increased supply of bonds. So, this combination of fiscal and monetary factors pushing bond yields up will pose a major challenge to equity markets," he added.

Around noon, the Sensex was down 122.12 points or 0.19 percent at 65,754.90, and the Nifty was down 31.60 points or 0.16 percent at 19,639.50. The declines outnumbered advanced in the broader market as about 1,481 shares advanced, 1,604 declined, and 107 stayed unchanged.

However, even in a day of weak market action, earnings guided stock-specific moves continued to remain in focus. Gains in select blue-chip stocks like LTIMindtree, Bajaj Auto and Nestle India, powered by their stellar July-September earnings helped the benchmark indices recoup some of their losses and come off the day's lows.

Stocks and sectors

Earnings-related, stock-specific action ruled the trade on October 19. Shares of Bajaj Auto emerged as the top performer on the Nifty 50, surging 5 percent after the company  beat analyst estimates with a 20 percent increase in net profit for the second quarter.

Investors also cheered for IT major LTIMindtree's better-than-expected margins in Q2, lifting the stock up well over 4 percent. A positive commentary from the management further aided the sentiment.

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While IndusInd Bank's Q2 numbers were largely in line with the Street's estimates, its higher slippages turned out to be a worry for most analysts. However, the lender's stable margins came as a rescue for investors who continued to push the stock over 2.5 percent higher.

The Nestle India shares also reacted positively to the FMCG company's quarterly earnings as it posted a beat on the bottomline. Moreover, the company also announced its first-ever stock split in the ratio of one-for-one which was applauded by the Street. Accordingly, the stock rose over a percent in trade.

However, there were a fair share of earnings misses as well. Another IT major, Wipro, came under the heat of strong selling after the company's topline grew the lowest among all tier-I IT companies. Bogged down by that, shares of the company slipped over 3 percent.

With the company's profit and revenue declining and amid a weak Q3 guidance, analysts expect Wipro's FY24 topline growth to be one of the lowest among Tier-1 IT services firms which include TCS and Infosys.

Bandhan Bank' sequential rise in provisions and gross non-performing assets in Q2 overshadowed the sharp rise in its on year profit. On that account, the stock dropped over 3 percent in trade today.

The broader market also remained under pressure as the Nifty Smallcap 100 and Nifty Midcap 100 indices traded in the red.

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